**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


Washington,
      D.C.
      20549




**FORM
      10-KSB**




**[X]
      ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
      OF**


1934




For
      the
      fiscal year ended: July 31, 2007




**[_]
      TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
      ACT**


**OF
      1934**




For
      the
      transition period from _____ to ______




*Commission
      File Number 333-130295*




**WELLSTAR
      INTERNATIONAL, INC.**


(Name
      of small business issuer in its charter)








Nevada
            20-1834908(State
                of incorporation)
            (IRS
                Employer Identification No.)




6911
                Pilliod Road
            43528Holland,
                Ohio
            (Zip
                Code)(Address
                of principal executive offices)




Issuer's
      telephone number: (419) 865-0069




Copies
      to: Darrin
        Ocasio
 Sichenzia
        Ross Friedman Ference LLP
 61
        Broadway, 32nd
        Fl.
 New
        York, NY 10006







Securities
      registered under Section 12(b) of the Exchange Act: NONE




Securities
      registered under Section 12(g) of the Exchange Act: NONE




Check
      whether the issuer (1) has filed all reports required to be filed
      by




Section
      13 or 15(d) of the Exchange Act 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 [X] No
      [_]




Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act). Yes [_] No [X]




Check
      if
      there is no disclosure of delinquent filers in response to Item 405 of
      Regulation S-B contained in this form, and no disclosure will be contained,
      to
      the best of the registrant's knowledge, in definitive proxy or information
      statements incorporated by reference in Part III of this Form 10-KSB or any
      amendment to this Form 10-KSB. [X] -




State
      the
      issuer's revenues for the most recent fiscal year: $101,500.




The
      aggregate market value of the voting and non-voting common equity held by
      non-affiliates computed by reference to the price at which the common equity
      was
      sold, or the average bid and asked price of such common equity, as of October
      25, 2006 was approximately $1,135,495.




State
      the
      number of shares outstanding of each of the issuer's classes of common equity,
      as of the latest practicable date: 126,166,117 shares of common stock, $.001
      par
      value per share, as of October 25, 2007.




Transitional
      Small Business Disclosure Format (check one): Yes [_] No [X]









TABLE
      OF CONTENTS




PART
                I
            PageItem
                1.DESCRIPTION OF
                BUSINESS
            3Item
              2.DESCRIPTION OF
              PROPERTY
            10Item
              3.LEGAL
              PROCEEDINGS
            10Item
              4.SUBMISSION OF MATTERS
              TO A VOTE OF SECURITY HOLDERS
            10PART
                IIItem
              5. MARKET FOR
              COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
            11Item
              6. MANAGEMENT'S
              DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
            12Item
              7. FINANCIAL
              STATEMENTS
            F-1Item
              8. CHANGES IN AND
              DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
              DISCLOSURE
            23Item
              8A.         CONTROLS AND
              PROCEDURES
            23PART
                IIIItem
              9. DIRECTORS,
              EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH
              SECTION
              16(b) OF THE EXCHANGE ACT
            23Item
              10.          EXECUTIVE
              COMPENSATION
            24Item
              11.          SECURITY
              OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
            25Item
              12.          CERTAIN
              RELATIONSHIPS AND RELATED TRANSACTIONS
            26Item
              13.          EXHIBITS
              AND REPORTS ON FORM 8-K
            26Item
              14.          PRINCIPAL
              ACCOUNTANT FEES AND SERVICES
            28SIGNATURES
            31




2





**PART
      I**




**Item
      1.**




**DESCRIPTION
      OF BUSINESS**




**Corporate
      History**




Wellstar
      International, Inc. ("Wellstar" or the "Company") was formed in the State of
      Nevada on December 5, 1997. Wellstar was a development stage company with no
      operating activities. On July 12, 2005, Wellstar entered into a share exchange
      agreement with Trillennium Medical Imaging, Inc. ("Trillennium" or "TMI"),
      a
      development stage company formed in June, 2005. As a result of the share
      exchange agreement, Trillennium became a subsidiary of Wellstar.




Wellstar
      International, Inc., through its Trillennium subsidiary, is dedicated to
      developing and licensing the use of advanced thermal imaging technology in
      the
      consumer health care and veterinary markets throughout the United
      States.




**Introduction**




Trillennium
      Medical Imaging, Inc. (TMI) is dedicated to placing cameras for a monthly charge
      in hospitals, clinical and care facilities throughout the United States. The
      company’s current competitive advantage is derived from the state of the art
      technology of the camera and software it is utilizing, combined with an intimate
      knowledge and relationships in the markets. It plans to grow in these markets
      by
      expanding its imaging capabilities by the constant acquisitions of new imaging
      technologies. In addition to the Human Imaging, TMI is positioned and ready
      to
      penetrate the equine market with the support of the leading experts in the
      thoroughbred industry.







The
      TMI
      Infrared Technology and software is approved by the FDA as an Adjunctive
      Diagnostic screening procedure for early breast cancer detection, differential
      diagnosis of pain dysfunctions, (such as Reflex Sympathetic Dystrophy,
      Neuromuscular Skeletal Syndromes and Neurological disorders), detection of
      pressure ulcers, deep tissue injuries, and bed sores, as well as orthopedic
      applications.  This screening modality provides a differential
      diagnosis to justify additional screening procedures to ensure successful
      patient outcome assessment. Thermal Imaging is a low cost, non-contact,
      non-radioactive diagnostic screening procedure designed for clinical evaluation.
      In addition thermal imaging provides an ability to track the progress of
      therapies being utilized in a low cost, non-invasive manner.





The
      TMI
      Infrared Technology fills a need that currently exists in diagnostic medicine
      today. Thermal imaging provides information that is specific to the
      physiological and functional activity in the body. This information becomes
      invaluable in that conventional diagnostic screening utilizes tests such as
      X-Ray, MRI and CT Scans. All aspects of these tests are concerned with the
      anatomical and structural problems of the body. Many problems arise from not
      combining both diagnostic modalities of structure and physiology, in that people
      are missed diagnosed and considered healthy and well when the physiological
      information provides an earlier outcome or risk assessment of future health
      predictors than the structural modalities.





3





Major
      markets such as University Research Centers, hospitals, multidisciplinary
      physician practices, pain centers, long term care facilities, home health care,
      and rehabilitation centers support the need for this type of screening
      modality.





In
      summary, Trillennium Medical Imaging has created an innovative new business
      model that gives it early market advantage.





**History
      and Future of Medical Infrared Applications**





The
      detection and estimation or measurement of heat released by the body has been
      a
      cornerstone of medicine since its beginning.  The earliest physicians
      knew the presence of excessive heat signaled illness.  For centuries
      the measurement of heat, either present in or being released by the body,
      required contact.  Temperature was physically felt and much later was
      measured with various devices such as the thermometer.





In
      the
      1800’s Herschel demonstrated the presence of heat energy as an invisible wave,
      much like light.  Heat could be reflected and refracted under the
      right conditions.  Understanding of this heat energy wave would
      require years of investigation. Much later, as all with all scientific advances,
      these studies would provide more finite measurements of heat
      energy.





In
      the
      1940’s, the electronic detector of infrared energy was developed for use in
      military applications.  Night vision scopes were the first
      applications.  The science of infrared detection owes its current
      development and sophistication to demands from military and industrial
      applications.





Medical
      use of infrared detection lagged behind military application due to government
      classification of the infrared detectors and technologies.  Only when
      scientific advances are released from such government restrictions are they
      open
      to general use and applications.  Once available, the
      scientific/medical application of the heat detector was made simultaneously
      by
      the British, the Canadians and Americans. These scientists and physicians used
      thermal imaging as a measurement of human physiology; the most common
      applications being the evaluation of cancerous tumors. The level of heat emitted
      was correlated to the presence and type of disease, as well as a prognostic
      indicator.  Many tumors were hot, and the hotter the tumor the worse
      the outcome.





These
      first infrared applications were both costly and cumbersome, therefore the
      infrared detection units were found mostly in research.  Like all
      early electronics the infrared detection systems were physically large, costly
      to produce and challenging to operate. These restrictions meant exposure to
      general medicine use was limited.





Today,
      through the advances in all levels of science, and driven by military funding,
      infrared detection devices are state-of-the art electronics.  Like all
      electronic components, the infrared detector has come down in cost, size and
      has
      significantly improved in general applicability.





The
      continued refinement of infrared systems, both in image acquisition and data
      collection, has brought the use of infrared energy analysis to a new
      level.  Together with a better understanding of human and animal
      physiological thermoregulatory mechanisms, the use of infrared detection in
      health and illness provides a new mechanism for early disease
      detection.





Trillennium
      Medical Imaging recognized the medical need for cost-effective, non-contact
      physiological monitoring – and embraced the use of infrared
      imaging.  Trillennium is dedicated to the advancement of infrared
      detection in medicine. Trillennium has forged relationships with well-know
      manufacturers of infrared detection systems, major players in multiple medical
      specialties, and highly skilled computer analysts – and together are developing
      state-of the art infrared imaging systems, as well as investigating new
      uses/applications in medicine.





The
      focus
      of medicine and health care today means technology must be “faster, better, and
      more cost-effective.” Trillennium Medical Imaging and its partners are working
      to make infrared detection systems the easiest to use, applicable in the
      every-day clinical setting and cost-effective in its application.





The
      use
      of infrared analysis has historically been limited in clinical
      application.  With improved science comes improve equipment
      development and with computerization – the analytical evaluation of infrared
      information is moving to new levels.  Today’s computerization of
      infrared systems is overcoming the limitations of the past
      applications.   Trillennium Medical Imaging systems incorporate,
      not only objective temperature data analysis, but TMI has also taken data
      collection to a new level.  Today, medical device development and use
      is based on evidence of efficacy.  Application data collected from all
      TMI systems is compiled into a single database that will continue to provide
      the
      statistical analysis needed to demonstrate the efficacy of this technology
      in
      all current and future applications. TMI is currently the only company to
      incorporate this data collection component into their systems.





The
      first
      records of physical observation demonstrate that physiological temperature
      variations have signaled the presence of disease.  Today the
      importance of this vital physical parameter is of no less significance.
      Together, scientific advancements and technological improvements will
      demonstrate that temperature shifts can signal the earliest stages of
      physiological change. Through non-contact temperature analysis, Trillennium
      Medical Imaging and partners will continue to demonstrate the efficacy of
      infrared analysis in disease detection and to drive the use of infrared analysis
      in new medical applications.





4





**The
      Future of Disease Detection**




Trillennium
      Medical Imaging sees the future of infrared imaging moving to critical positions
      in early phase disease detection and monitoring.  Although currently
      not a diagnostic modality, infrared analysis still provides key information
      in
      health monitoring. The development of objective data analysis and proof of
      efficacy will catapult infrared detection to key positions and
      prominence.  Trillennium’s current research project, early detection
      of tissue breakdown, will provide the initial data demonstrating IR’s ability to
      detect damage prior to visible evidence.  This capability – in a
      non-contact device – will save patients from potential disabling conditions, as
      well as generate a sizeable cost-savings in health care.





Trillennium
      believes translation of the ‘early tissue damage detection’ application to other
      previously untried medical areas- such as early detection of infection – will
      reduce the associated costs and potential spread of treatment-resistant super
      bugs. Super drugs have created super bugs and today the spread of
      treatment-resistant disease is a major concern.  Both community spread
      and in-hospital presence of these organisms is a detection
      nightmare.  In spite of improved hygiene – transmission and
      containment of various diseases is still of critical importance.





Additionally,
      cost-effective, non-contact detection of circulatory compromise in surgical
      applications will improve the success of many tissue transplants, reducing
      the
      need for additional surgeries. And non-contact evaluation of tissue changes
      may
      help categorize potentially malignant conditions demanding greater intervention
      from those that are currently benign.  However, these arenas are all
      in the invention phase, and as all research, requires large capital investments
      to translate the research findings to clinical
      application.  Trillennium believes these areas hold huge potential in
      both dollars spent in health care delivery as well as corporate
      return-on-investment and strives to keep these investigations
      on-going.







**Markets**





**Skin
      Assessment**





The
      early
      visualization of tissue damage that can lead to development of pressure ulcers
      and or deep tissue injury is paramount to the reduction of open sores and the
      deadly complications that accompany them. Currently no method of detection
      is
      used that can identify tissue breakdown prior to the visible and palpable
      changes that take place.





Trillennium
      Medical Imaging began investigation of this health care issue shortly after
      the
      company was formed. The ability of infrared to detect blood flow changes is
      well
      documented and the key benefit of the technology.  Association of
      blood flow changes to both pressure ulcers and deep tissue injury has been
      documented since the 1970’s when early imaging units were used to image
      suspicious damage. One of the original studies of pressure sores by thermal
      detection was conducted by Barton and Barton in 1973.  Studying
      existing ulcers they determined the temperature variations present with their
      classification of ‘indolent’ and normal pressure sores. The category of indolent
      was associated with a longer healing time (approximately four months) and a
      temperature difference of 1°C or less.  A classification of normal
      demonstrated a higher temperature differential of approximately 2.5oC and healed
      more quickly than indolent sores and the patients generally displayed a better
      outcome. This ‘normal’ classification of ulcer was generally attributed to the
‘otherwise healthy person’ whose pressure sore was either post operative from
      extended times in one position or from incorrect use of a prosthetic device.
      This wound usually resolved in six weeks.  This thermal evaluation has
      been substantiated by Hansen et al in a 1996 study.





The
      size,
      cost and availability of infrared was a limiting factor in its use for many
      years.  The most cost effective detection was contact thermography,
      and the question was if the contact alone was increasing the possible artifact
      of damage.  Electronic imaging provided the benefit of non-contact
      evaluation, but thermal artifact induced in uncontrolled environments was still
      a question.





Trillennium
      Medical Imaging began the process of incorporating computerized analysis of
      images to eliminate the subjective influence of previous infrared
      analysis.  Changes introduced in the analytical phase reduced the
      influence of environmental shifts.  This proprietary approach is
      currently undergoing evaluation and data will be presented following completion
      of the anticipated Duke University study.





**Market
      Opportunities**





Functional
      or physiological evaluation conducted with infrared imaging has applications
      in
      many areas of medicine. Initially, Trillennium Medical Imaging focused on three
      key markets with our current imaging system: Breast Health Monitoring, Pain
      Evaluation; and Sports Medicine applications.  However recent
      developments indicate significant economic gains can be realized with a revised
      plan.





Trillennium
      Medical has begun investigating the use of infrared detection in early stage
      pressure ulcer development. Trillennium is proposing a unique approach for
      early
      detection of tissue changes that will significantly impact the wound care
      market.  TMI is in the initial phase for design and application of a
      new imaging device that incorporates software and data collection that is
      separate and apart from its current clinical markets.





5




While
      Trillennium Medical Imaging will continue to prove the viability of IR through
      its ongoing trials in existing markets (outlined under existing market profile),
      it is evident that a method of early detection of tissue changes related to
      pressure ulcers is not currently available.


Pressure
      ulcers have always been an area of concern for healthcare providers due to
      the
      degradation of the patient’s condition and the increased care required when
      pressure ulcers occur.   Pressure ulcers are responsible for over
      65,000 deaths per year in the United States alone.  Aside from the
      human toll, the costs involved in treating this problem are enormous and
      escalating at an alarming rate annually.   Taking into
      consideration all direct, indirect and peripheral costs, it is conservatively
      estimated that currently over $25 billion is spent annually on wound care in
      the
      United States (Columbia Surgery, Department of Surgery, H. Brem, M.D., 2006).
      The urgency of this situation is not lost on those in the medical field,
      associated industries and the government as well.





Each
      year
      the government spends on average over $3 billion on wound treatment and care
      for
      pressure sores and bedsores.  Insurance companies pay out millions
      annually for this same treatment, directly affecting premiums to increase
      annually for healthcare facilities.  Inflationary effects add to this
      escalation.





New
      regulation recently imposed by the Center for Medicare and Medicaid will reshape
      the approach by all health care facilities and
      practitioners.  Beginning in 2008, reimbursement for the care of
      individuals incurring pressure ulcers during hospitalization will no longer
      be
      reimbursed.  It is managements opinion that this edict from the
      government will be followed by third party payers.  This loss of
      revenue will cripple many health care facilities if not checked.





Additionally,
      the potential of fines incurred for the occurrence of pressure ulcers in the
      long term care facilities will drive these markets with burden of
      proof.





Trillennium
      Medical Imaging will be ideally poised to provide a cost-effective, non-contact
      method to identify the presence of early or existing tissue damage.





**Breast
      Health Monitoring**





Current
      Testing/Screening Methods





The
      medically accepted tool (gold standard) for breast cancer screening is x-ray
      mammography.  Mammography detects structural changes present in the
      breast tissue, indicating either the presence of dead cell structures
      (calcifications) or a shift in tissue density. Mammography was established
      as
      the test of choice following the Breast Cancer Detection Demonstration Project
      (BCDDP) study and as a result of the Health Insurance Plan (HIP) study of
      1974.





According
      to the National Cancer Institute Fact Sheet on Mammography, “Several large
      studies conducted around the world show that breast cancer screening with
      mammograms reduces the number of deaths from breast cancer for women ages 40
      to
      69, especially those over age 50. Studies conducted to date have not shown
      a
      benefit from regular screening mammograms, or from a baseline screening
      mammogram (a mammogram used for comparison), in women under age
      40.”  Regardless, it is the only medically accepted screening test
      to-date.





With
      the
      evolution in technology, proposals have been made to implement other modalities
      in the screening process. Due to associated cost, and or sensitivity and
      specificity of the exams (Ultrasound/MRI/PET) recommendations for screening
      have
      not changed. These tests are used as ‘adjunctive’ or in addition to mammography
      following a positive or questionable test.





**Limitations
      of Current Methods**





Contact,
      compression, ionizing radiation, limited or no options for screening other
      than
      mammography (physician restricted access) and cost are some of the primary
      reasons women list for limited or non-participation in breast health
      evaluation.





Current
      statistics demonstrating the number of women who participate in mammography
      are
      not readily available. 2002 studies estimated approx 60% of women over the
      age
      of 40 participated in mammography within the year.  Studies show that
      for the uninsured it (screening mammography) is a low priority procedure,
      because few programs exist to assist in the payment for or toward mammography
      for women less than 50 years of age as are for those who are older
      (Medicare).





“Women
      over the ages of 50 and 60 are not getting mammograms as frequently as women
      in
      their 40s, yet mammograms are more effective in reducing deaths from breast
      cancer as women age.”





Women
      reject or delay mammography for many reasons.  Fear appears to be the
      primary factor.  Fear of discomfort, fear of radiation and fear of
      finding cancer are only a few reasons that women site.





Many
      women falsely believe that if there is no known breast cancer within their
      family that there is no reason to be concerned. Few women know that
      approximately 75% of breast cancers found occur in women who have no known
      history.





Studies
      indicate that 40% or more of the population eligible for screening mammography
      do not participate in testing.  Reasons listed are economic, cultural
      and perception of increased harm (radiation / compression) from the exam –
whether real or imagined.  These factors contribute to
      late-stage





6




**Importance
      of Infrared Imaging for Breast Cancer**





Management
      defines risk as the likelihood that harm will arise coupled with
      consequence.  Medical assessment of ‘risk’ for developing breast
      cancer is linked with time/cost and effort to arrive at the benefit of risk
      assessment.  Risk/benefit studies determine that screening for breast
      cancer should begin at 40 years of age.  The cost of screening the
      female population younger than 40 years of age provides no reduction in
      life-years saved compared to costs incurred.





Although
      mammography screening is an effective tool for detecting the presence of breast
      cancer, it has inherent and well described limitations.  In addition,
      mathematical models such as the Gail Model have been developed to
      predict**breast cancer*risk*, but such models are better at
      assessing population-based risk rather than individual risk.





Monitoring
      individuals with infrared imaging provides for improved individual assessment
      to
      determine the ‘at-risk’ person as indicated by physiology (versus mathematical),
      and therefore in a screening scenario, the ‘at-risk’ population.





Infrared
      imaging is a non-contact, non-invasive, non-ionizing imaging tool and poses
      no
      physical risk. It displays information regarding breast blood
      flow.  Temperature assessment of breast tissue provides for a profile
      as it relates to homeostasis within the breast tissue.  Any
      alterations are attributed to imbalance.  The presence of structural
      changes or tissue is not visible on the infrared image. But neither is the
      vascular information displayed on the mammogram.  Screening the breast
      with infrared provides the individual and practitioner with information not
      currently available as a screening modality.  Other functional imaging
      is prohibited by availability and cost. (fMRI/ PET/f CT). Additionally other
      functional modalities are most often incorporated into structural exams such
      as
      computed tomography and MRI.





Infrared
      study parameters have been identified as consistent repeatable and independent
      markers that identify those patients at risk for breast disease.  Ease
      of implementation (non-ionizing), low comparative cost and appeal to the general
      population (non-contact) make it an ideal test for screening in the younger
      patient (not a candidate for mammography), the woman with dense breasts or
      implants, those who have surgically altered breasts that add to mammography
      distortion (biopsies, lumpectomies, mastectomies) and those that refuse to
      participate in screening mammography.





**Market
      Opportunities**





Breast
      Health Monitoring/Screening





Today
      the
      U.S population is roughly 300 million (projection based on 2000 Census Data)
      and
      of this 150 million individuals are female. According to the Census Bureau,
      currently the largest segments of females are 40-44 (11.35M), 35-39 (11.34M)
      and
      45-49 (10.27M) years of age respectively. These are closely followed by the
      30-34 (10.21M) and the 10-14 (10M) years of age.





These
      numbers become significant when we consider the disease of breast
      cancer.  It is the second leading cause of cancer deaths in the female
      population. 1 in 8 women will be diagnosed with cancer of the breast during
      their lifetime.





The
      probability of breast cancer occurrence increases with age.  Fifty
      percent of all breast cancers will occur in women under 61 -- the median age
      of
      occurrence. But roughly 1/3 of all breast cancers will occur in women under
      the
      age of 50 (20 to 50 years of age.)  In the total population of breast
      cancers the largest percentage are found in women over 50 years of
      age.  The average projected growth rate (disease development prior to
      detection) for breast cancer is approximately 8 to 10 years.  For this
      reason, mammography is recommended as a screening procedure beginning at 40
      years of age.





U.S
      Government statistics in 2005, show an estimated 2 million women diagnosed
      with
      or living with breast cancer.  2006 estimates projected 212,920 new
      cases of invasive breast cancer diagnosed, along with 61,980 new cases of
      non-invasive breast cancer. The current medical paradigm with breast imaging
      is
      demonstrated in the inability of mammography to reduce the mortality statistics
      of those women found with invasive breast lesions.  Structural
      studies, and mammography in particular, are detecting the presence of tumors
      and
      tissue changes, but missing the functional or metabolic activity presented
      by
      the disease. Infrared has continued to demonstrate underlying metabolic changes
      present in tissue years in advance of mammography.  Slow growing,
      metabolically inactive cancers such as those with low IR signals can easily
      be
      detected with mammography. The issue of early detection is key for the women
      with dense breasts, especially the younger woman who would be missed by never
      participating in mammography until a palpable lesion is found.




**Sports
      Medicine**





Sports
      medicine or sport medicine is an interdisciplinary subspecialty of medicine
      which deals with the treatment and preventive care of athletes, both amateur
      and
      professional. The team includes specialty physicians and surgeons, athletic
      trainers, physical therapists, coaches, other personnel, and, of course, the
      athlete.





7




There
      has
      been a tendency for many to assume that sport-related problems are by default
      musculoskeletal and that sports medicine is an orthopedic specialty. It is
      commonly understood that there is much more to sports medicine than just
      musculoskeletal diagnosis and treatment. Illness or injury in sport can be
      caused by many factors – from environmental to physiological and psychological.
      Consequently, sports medicine****can encompass an array of
      specialties, including cardiology, pulmonology, orthopedic surgery, exercise
      physiology, biomechanics, and traumatology.





The
      risk
      of injury in athletic practice will never be entirely eliminated, but
      modifications in training techniques, equipment, sports venues and rules, based
      on outcomes of meaningful research have shown that it can be lowered. For these
      reasons sports medicine will make its most significant future contributions
      in
      the area of prevention.





**Market
      Opportunities**





When
      all
      the inclusive markets are considered, the total revenue projections for the
      sports medicine market are vast but illusive. Costs are measured in billions
      of
      dollars when both treatment cost and indirect costs of loss (wage and
      productivity) are considered.





Differential
      diagnosis related to sports injuries is complicated by the fact that soft tissue injuries
      are some of the most common and
      clinically challenging musculoskeletal disorders in patients presenting for
      treatment. Therefore, establishing clear-cut diagnostic and therapeutic
      objectives for these injuries is important. Current imaging methods of
      evaluation are structural. Flat plane x-ray, computed tomography (CT),
      ultrasound, and MRI are the most common examinations.  This leaves the
      assessment of soft tissue injury to visual, palpable and indirect visualization
      via the structural image.





Complication
      of evaluation (structure vs. tissue) results in inappropriate or ill-timed
      care.  Oversight of the magnitude of soft tissue injuries may result
      in a failure to expeditiously consider vascular injury or compartment syndrome
      and its resultant complications, including loss of a
      limb.  Misdiagnosis or mismanagement of damage may lead to chronic
      problems with subsequent development of degenerative joint disease and/or loss
      of function, including but not limited to an inability to bear weight or
      ambulate.





Like
      all
      areas of pain, the number of those afflicted by joint and connective tissue
      disorders seems to be increasing rather than under control.


Statistics
      taken from the U.S. government website on arthritis provides the following
      numbers related to occurrence.An estimated 46 million adults in the United
      States reported being told by a doctor that they have some form of arthritis,
      rheumatoid arthritis, gout, lupus, or fibromyalgia. By 2030, an estimated 67
      million of Americans aged 18 years or older are projected to have
      doctor-diagnosed arthritis. Arthritis & Rheumatism 2006;54(1):226-229 [Data
      Source: 2003 NHIS]




**Importance
      of TMI Infrared Monitoring System**





Until
      recently, sports medicine has been a little-explored market for infrared
      technology as an adjunctive to diagnostics.  Infrared imaging provides
      an indirect measurement of skin blood flow and a temperature measurement of
      the
      physiological response controlled by the body’s autonomic nervous
      system.  This information has broad application in the world of sports
      medicine.  Infrared evaluation can provide a new dimension to
      diagnostic capabilities in an adjunctive capacity (physiology vs.
      anatomy).  Some of these applications are:  providing a
      monitor for hyperthermic and hypothermic responses associated with nerve
      irritation, acute injuries, swelling, inflammation, infection, and
      atrophy.  Provide physicians and trainers with a visual and measurable
      reference for differential diagnosis, and a visual and objective reference
      relating to treatment efficacy.





**TMI
      Solution in Sports Medicine Applications**





TMI
      is
      currently involved in a pilot study with Duke University Sports Medicine
      evaluating infrared technology for spot-checking of core body temperatures
      of
      athletes in the field.  The preliminary study of this non-invasive
      technology has demonstrated temperature readings that are directly correlated
      with the core body temperature in a small population.  A more
      extensive study is being planned. The value will be an easy to use, non-invasive
      tool for monitoring heat exhaustion in athletics that can be easily used in
      the
      field.  All levels and types of sports organizations (schools, teams
      and professionals) could all benefit from using this technology.  TMI
      is working to develop a portable, cost-effective, handheld solution that will
      fit the need of this extensive market.





TMI
      is
      also exploring the use of this same assessment tool for immediate trauma
      evaluation on the field or in emergency rooms for monitoring deep tissue injury
      and assist with fast evaluation of potential compartment syndrome.





**TMI
      Market Approach**




With
      significant relationships in the medical industry, our initial marketing
      approach will be to hospitals for the early detection of pressure ulcers. If
      the
      study contemplated at Duke University is successful TMI will have the first
      known and proven imaging system to detect pressure ulcers before the break
      the
      skin.




8




**Rheumatology**





For
      over
      forty years infrared measurement has been used in the evaluation of
      rheumatological disease.  Initially identified and analyzed in the
      1970’s by Abernathy, Ring, and many others, joint and connective tissue
      disorders were an undisputed area in which infrared detection provided a
      non-ionizing and non-contact method of detection.





Infrared
      evaluation provides both an indication of abnormal blood flow in the area of
      pain, and as a monitoring device for the efficacy of various
      therapies.  Additionally infrared imaging is an ideal tool for
      evaluation of this peripheral blood flow and vasospastic disorders of peripheral
      digital vessels is often an indication of connective tissue
      disorders.




**Research
      and Development**




**Equipment
      Development**




We
      continue to interface with equipment manufacturers and medical device research
      and development firms to seek out state of the art thermal imaging
      technology.




In
      addition, we are in the process of creating a Data Collection division. This
      will enable us to keep data and compare results of images taken from all of
      our
      cameras. This will then lead to definitive conclusions for the medical
      community. Through a HIPPA-compliant database we plan to gather a
      statistically-verifiable data set from our patient population from all of our
      participating facilities. This information will be compared to currently known
      statistics and provide additional verification regarding the efficacy of
      infrared imaging in a variety of applications. The medical community requires
      "evidence" to back the use or implementation of all technologies. TMI expects
      that its thermal imaging operations will yield significant data. This will
      supply the data needed to support evidenced-based practice. This data can then
      be compared to the patient outcome-information held by each
      practitioner.




**Future
      Market Research/Medical**





**Grafts
      and Flaps**





The
      use
      of skin grafts and local flaps can help solve some difficult wound closure
      problems.  Postoperative flap failure is a devastating complication
      that surgeons occasionally encounter when using plastic surgery
      techniques.





Intraoperative
      monitoring of flap perfusion has shown to prevent flap
      failure.  Infrared imaging can be used to evaluate and monitor
      reperfusion, and is a fast, non-contact, reliable method.





Infrared
      can be used preoperatively to trace perforators in the skin to be excised for
      reconstruction, as well as postoperatively to monitor the rewarming following
      attachment.





**Amputation**





Infrared
      has proven to be valuable in the area of amputation of tissue as
      well.  Evaluation of digits or limbs of persons undergoing amputation
      has improved the success by proving or disproving the viability of tissue
      present.  In instances of lower limb amputation due to peripheral
      vascular disease, amputation can often be preformed below the knee, improving
      the rehabilitation and mobility of the patient and therefore quality of life
      issues. Selection of amputation level made on the basis of laboratory criteria
      using skin blood flow and infrared thermography data proves to be more
      successful.





**Diabetic
      Neuropathy**





Diabetic
      peripheral neuropathy (DPN) is a condition secondary to the disease and can
      result in ulceration.  Of the diabetic population 0.6 % eventually
      require lower limb amputation.  However of those with peripheral
      neuropathy roughly 40% require amputation of a toe, 12% a foot, and
      47%


The
      total
      annual cost of DPN and its complications in the U.S. was


estimated
      to be between $4.6 and $13.7 billion. Up to 27% of the direct medical cost
      of
      diabetes




**Dermatology**




“The
      skin is the largest organ in the body, and it is therefore not
      surprising that cancer of the skin is the most common of all cancers. Basal
      cell
      carcinoma and squamous cell carcinoma make up the vast majority of cases.
      Melanoma is the least common but the most deadly skin cancer, accounting for
      only about 4% of all cases but 79% of skin cancer deaths. For 2002, the American
      Cancer Society estimates there will be 53,600 new cases of melanoma in the
      United States and 7,400 deaths from the disease. The United States has
      experienced a dramatic increase in the number of melanoma cases over the past
      few decades. According to the American Cancer Society, the incidence rate for
      melanoma (number of new cases of melanoma per 100,000 people each year) has
      more
      than doubled since 1973. The mortality rate for melanoma (number of deaths
      per
      100,000 people each year) has increased at a much slower pace and has remained
      stable over the past 10 years. During this same time period, there has been
      a
      significant rise in overall five-year survival in patients with melanoma. This
      may be due to thinner depth of tumors at time of diagnosis and improved surgical
      techniques to treat the disease. “




9




The
      study
      of skin and skin lesions is an area of infrared that has waxed and waned since
      the early studies of thermography conducted in the 1980’s by the
      French.  Evaluation of the thermal flare presented by the increased
      vascularity present in melanomas was thermally mapped prior to
      radiotherapy.  Infrared mapping provided information that demonstrated
      that the underlying vascular bed related to the visible lesion was usually
      significantly larger than assumed, and if not included in the area of radiation,
      may remain as a pathway of metastasis.





With
      the
      increase in melanoma occurrence, the use of infrared imaging in screening
      evaluations could add to number of cases found in the early
      stages.  Additionally, the use to map the underlying vascularity could
      again aid in mapping the underlying angiogenic blood supply to the
      tumor.




**Pharmaceuticals/Vaccines**





The
      use
      of infrared detection for adverse reactions resulting from administration of
      drugs and vaccines is an area of potential investigation.


Trillennium
      Medical Imaging anticipates that investigation of adverse reactions with
      infrared imaging may provide a non-contact, cost-effective way to monitor for
      adverse reactions prior to their occurrence.  Through is affiliation
      with Duke University, TMI plans to participate in research projects that are
      first isolating these drug-reaction potentials in mice.  Participation
      in this and other research projects will require capital investment to provide
      various lens and other adaptations to the existing infrared imaging device,
      as
      well as the possible development of other specific IR optical imaging devices
      that could revolutionize this arena.





Trillennium,
      through its advisors and affiliates will continue to investigate areas of
      medical concern where infrared imaging will possibly benefit the
      survival-outcome, the cost-effective delivery of non-invasive diagnostic and
      adjunctive imaging, as well the return-on-investment from development of such
      products.




**FDA
      Regulations**




Changes
      in Approved Devices -  The FD&C Act requires device manufacturers
      to obtain a new FDA 510(k) clearance when there is a substantial change or
      modification in the intended use of a legally marketed device or a change or
      modification, including product enhancements and, in some cases, manufacturing
      changes, to a legally marketed device that could significantly affect its safety
      or effectiveness. Supplements for approved PMA devices are required for device
      changes, including some manufacturing changes that affect safety or
      effectiveness. For devices marketed pursuant to 510(k) determinations of
      substantial equivalence, the manufacturer must obtain FDA clearance of a new
      510(k) notification prior to marketing the modified device. For devices marketed
      with PMA, the manufacturer must obtain FDA approval of a supplement to the
      PMA
      prior to marketing the modified device.




Good
      Manufacturing Practices and Reporting. TMI does not manufacture the infrared
      cameras used in its thermal imaging system. Nevertheless, the FD&C Act
      requires device manufacturers to comply with Good Manufacturing Practices
      regulations. The regulations require that medical device manufacturers comply
      with various quality control requirements pertaining to design controls,
      purchasing contracts, organization and personnel, including device and
      manufacturing process design, buildings, environmental control, cleaning and
      sanitation; equipment and calibration of equipment; medical device components;
      manufacturing specifications and processes; reprocessing of devices; labeling
      and packaging; in-process and finished device inspection and acceptance; device
      failure investigations; and record keeping requirements including complaint
      files and device tracking. We are in compliance with the above
      requirements.




Current
      Regulatory Status-  The FDA found that the cameras utilized in the TMI
      thermal imaging system are substantially equivalent to an existing legally
      marketed device, thus permitting them to be marketed as an adjunct
      (supplemental) screening/diagnostic device. The cameras utilized in our system
      first received 510(k) clearance in September 2001 and subsequently in March
      2003. Together with our proprietary software we, are marketing the TMI thermal
      imaging system as an adjunct (supplemental) method for the diagnosis of breast
      cancer and other diseases affecting the perfusion or reperfusion of blood in
      tissue or organs.




**Permits
      and Inspections**




The
      manufacturer of the thermal imaging cameras utilized in the TMI thermal imaging
      system is subject to compliance with Good Manufacturing Practices under the
      FD&C Act, as described above. The manufacturer is subject to government
      inspection and failure to comply with all applicable standards can result in
      suspension or termination of its ability to manufacture cameras for use in
      our
      system. In that event we would be compelled to seek thermal imaging cameras
      from
      other manufacturers.




Users
      of
      the TMI thermal imaging system are required to utilize protocols for accurate
      thermal imaging such as the "Technical Protocols for High Resolution Infrared
      Imaging" approved by the ACCII 5-15-99. Failure to comply with these
      requirements can result in suspension or termination of the facilities'
      authority to utilize our thermal imaging system. In that event we would
      experience a disruption in revenue while we removed our equipment and sought
      to
      install it in another location.




**Item
      2. DESCRIPTION OF PROPERTY**




We
      maintain our principal office at 6911 Pilliod Road, Holland OH 43528. Our
      telephone number at that office is (419) 865-0069 and our facsimile number
      is
      (419) 867-0829.




**Item
      3. LEGAL PROCEEDINGS**




We
      may
      become involved in a lawsuit or legal proceeding at any time in the ordinary
      course of business. Litigation is subject to inherent uncertainties, and an
      unexpected adverse result may arise that may adversely affect our business.
      We
      are currently not aware of any litigation pending or threatened for any reason.
      We are not aware of any additional legal proceeding or claims that we believe
      will have, individually or in the aggregate, a material adverse affect on our
      business, financial condition or operating results.




**Item
      4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS**




There
      was
      no matter submitted to a vote of the Company's security holders during the
      fourth quarter of the fiscal year ended July 31, 2007.




10




**PART
      II**




**Item
      5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER
      MATTERS**




**Market
      Information**




Our
      common stock is quoted on the Pink Sheets under the symbol "WLSI."




For
      the
      periods indicated, the following table sets forth the high and low bid prices
      per share of common stock. These prices represent inter-dealer quotations
      without retail markup, markdown, or commission and may not necessarily represent
      actual transactions.




Particularly
      since our common stock is traded infrequently, such over-the-counter market
      quotations reflect inter-dealer prices, without markup, markdown or commissions
      and may not necessarily represent actual transactions or a liquid trading
      market.




Quarter
                Ended
            High
            LowJanuary
                31, 2005
            0.015
            0.10April
                30, 2005
            0.015
            0.015July
                31, 2005
            0.82
            0.015October
                31, 2005
            0.43
            0.09January
                31, 2006
            0.28
            0.075April
                30, 2006
            0.28
            0.085July
                31, 2006
            0.29
            0.165October
                31, 2006
            0.225
            0.031January
                31, 2007
            0.09
            0.024April
                30, 2007
            0.05
            0.01July
                31, 2007
            0.03
            0.01October
                31, 2007
            0.02
            0.004




**Number
      of Stockholders**




As
      of
      October 25, 2007, there were approximately 126,166,117 shares of common stock
      outstanding, of which 79,090,000 shares were restricted under Rule 144 of the
      Securities Act of 1933.




As
      of
      October 25, 2007, there were approximately 84 active holders of our common
      stock. The number of record holders was determined from the records of our
      transfer agent and does not include beneficial owners of common stock whose
      shares are held in the names of various security brokers, dealers, and
      registered clearing agencies. The transfer agent of our common stock is Pacific
      Stock Transfer.




**Dividend
      Policy**




Historically,
      we have not paid any dividends to the holders of our common stock and we do
      not
      expect to pay any such dividends in the foreseeable future as we expect to
      retain our future earnings for use in the operation and expansion of our
      business. In addition, any future determination to pay cash dividends will
      be at
      the discretion of the Board of Directors and will be dependent upon our
      financial condition, results of operations, capital requirements, and such
      other
      factors as the Board of Directors deem relevant.




11




**Item
      6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
      OPERATION**




The
      following discussion should be read in conjunction with our consolidated
      financial statements and notes to those statements. In addition to historical
      information, the following discussion and other parts of this annual report
      contain forward-looking information that involves risks and
      uncertainties.




**General
      Overview**




Trillennium
      Medical Imaging's business model is based upon clinical research that proves
      disease is a 10-20 year progression prior to the development of symptoms and
      ultimately tumor growth in the form of cancer. Pain dysfunctions affecting
      Americans not able to be identified with conventional imaging such as MRI,
      CT or
      X-Ray provide an additional market for physiological thermal imaging.
      Trillennium Medical Imaging utilizes the latest technology, including medical
      infrared camera equipment and advanced TMI V 5.0 interfaced software, to
      identify the disease process early so that lifestyle modification and immediate
      medical interventions can offset years of potential poor health, staggering
      out
      of pocket health care costs and untimely death due to late diagnosis in a
      disease process.




**Plan
      of Operation**





We
      have
      been developing our market opportunity in the area of diagnosing pre existing
      pressure ulcers before they break the skin. To substantiate our systems
      capability, we will be entering into an agreement with Duke Medical Center,
      specifically with their wound care division. If we are able to substantiate
      this
      opportunity, we will have a medically proven system that will be needed in
      hospitals and nursing homes around the world.




**Acquisition
      of the Assets of Micro Health Systems**




We
      acquired the assets of Micro Health Systems ("Micro Health" or "MHS") in
      December 2005. Pursuant to the agreement, TMI obtained the following: MHS's
      customer lists; the assignment of MHS' exclusive supplier contract with Mikron
      Instrument Co., which supplies our thermal imaging cameras, and all other
      intangibles such as FDA rights; and tangible assets.




12


11


The
      purchase price consisted of $600,000 cash and 2,000,000 shares of Wellstar
      common stock. The $600,000 portion of the purchase price is payable as follows:
      $400,000 cash at closing; $200,000 in the form of a promissory note with
      interest at 8%; $100,000 with accrued interest due within 180 days of the note
      signing and the balance with interest due within 365 days from
      closing.




The
      exclusive supplier agreement between the Company and Mikron Infrared, Inc.
      ("Mikron")(formerly Mikron Instrument Company, Inc.) provides the Company with
      a
      supply of the Company's primary product - thermal imaging cameras utilizing
      infrared imaging technology for use in the medical and veterinary markets.
      The
      Company's obligation to market Mikron manufactured thermal imaging cameras
      utilizing infrared imaging technology is on a "best efforts" basis and does
      not
      contain a minimum purchase requirement. While the Company prefers to utilize
      Mikron manufactured equipment, it is not contractually restricted from
      purchasing thermal imaging cameras utilizing infrared imaging technology from
      other manufacturers. The Company has had preliminary discussions with other
      manufacturers and although there are no contractual arrangements in place,
      management believes it would be able to obtain thermal imaging cameras utilizing
      infrared imaging technology from alternative suppliers without no more than
      a
      deminimus disruption in supply. Accordingly, in the event of a disruption in
      supply from Mikron, the Company would not be materially impaired from continuing
      to supply its existing customer base or from expanding its market
      share.




In
      addition to obtaining the exclusive North American, European and Middle East
      rights to market the FDA approved thermal imaging cameras manufactured by
      Mikron, the Company also acquired related software from Mikron. The software
      provides images allowing for fast, accurate interpretation of the data collected
      by the thermal imaging cameras. By obtaining the rights to market the thermal
      imaging cameras that have been approved by the FDA and by obtaining software
      that is acceptable in the marketplace, the Company believes it has saved
      significant development time and expense, thereby allowing the Company to
      immediately go to market with FDA approved equipment. This has enabled the
      Company to have its equipment and software utilized for future research studies
      at Duke University Medical Center. The Company's current financial projections
      are based solely upon these contracts. The Company's acquisition of Micro Health
      Systems did not include the assumption of any existing contracts with prior
      purchasers of thermal imaging cameras and hence no pre-existing revenue base
      was
      acquired from the acquisition of Micro Health Systems.




**Research
      Studies**




We
      currently are discussing with Duke University up to 4 studies. The first study
      should start within about 30 days with regard to Pressure Ulcers.




a.
            Pressure
                Ulcers




b.
            Breast
                Imaging;




c.
            Oestoarthritis;




d.
            Sports
                Medicine.




**Results
      of Operations for the Fiscal Year Ended July 31, 2007 Compared To the Fiscal
      Year Ended July 31, 2006**




**Revenues**




For
      the
      year ended July 31, 2007, we had revenues of $101,500 from our medical imaging
      business. Revenues in the amount of $100,000 were generated from the Limited
      Technology License Agreement with MacLath Ltd for the exclusive rights to
      distribute Trillennium products and systems within a prescribed geographic
      area
      and limited to the usage or application I the evaluation of human arthritic
      conditions. The license is currently in default because the licensee has not
      made, with the exception of the first payment of $100,000, the required payments
      under the agreement.  We have accordingly only recognized as revenue
      the $100,000 payment.


12




**Net
      Loss**




For
      the
      year ended July 31, 2007, we incurred a net loss of $3,654,117, or $.04 per
      share, which was a decrease of $1,126,986 from the net loss of $4,781,103,
      or
      $.06 per share for the year ended July 31, 2006. The decrease in net loss is
      attributable to Derivative Instrument Net Expense which decreased by $1,499,687
      from $839,662 for the year ended July 31, 2007 as compared to $2,339,349 for
      the
      year ended July 31,2006. This decrease in expense from the derivative instrument
      is as a result of our stock price being lower at July 31, 2007 compared to
      January 31, 2006, which results in the decline of our derivative liabilities
      for
      the same period one year ago. As a result, we recorded a net decrease in expense
      related to our derivative liabilities. This decrease in expense may be reversed
      in the future if the liabilities increase, depending on our stock
      price.




13




**Operating
      Expenses**





Total
      operating expenses for the year ended July 31, 2007 increased by $394,180 to
      $2,433,269 from $2,039,089 for the year ended July 31, 2006. This change is
      due
      principally to an increase in expenses for professional fees to $448,182 from
      $336,070 and in travel expense to $207,438 from $171,996.




**Selling,
      General and Administrative Expenses**




Our
      selling, general and administrative expenses totaled $2,095,515 for the year
      ended July 31, 2007. This amount included the following: salaries for officers
      and employees totaling $990,925, business travel totaling $207,438 and
      professional fees for consultants, attorneys and auditors totaling
      $448,182.




**Depreciation
      and Amortization**




For
      the
      year ended July 31, 2007, our deprecation and amortization expense was $337,754.
      This charge represents a charge to operations for depreciating the imaging
      equipment and the office equipment and fixtures, which has a cost of $505,761
      and $150,354 respectively. The depreciable assets have been assigned a useful
      life of five years. It also includes a charge for amortizing the covenant not
      to
      compete, manufacturing and distribution agreement, loan acquisition costs and
      software and manuals, which have a cost of $20,000, $ 700,000, $237,525 and
      $120,000 respectively with a life of 2 to 5.5 years.




**Interest
      Expense**




For
      the
      year ended July 31, 2007 interest expense was $375,159, which primarily
      represents interest charges on our debt to AJW Partners, LLC and its related
      entities.




**Critical
      Accounting Policies and Estimates**




The
      preparation of financial statements in accordance with accounting principles
      generally accepted in the United States requires that management make a number
      of assumptions and estimates that affect the reported amounts of assets,
      liabilities, revenues and expenses in our consolidated financial statements
      and
      accompanying notes. Management bases its estimates on historical information
      and
      assumptions believed to be reasonable. Although these estimates are based on
      management's best knowledge of current events and circumstances that may impact
      the Company in the future, actual results may differ from these
      estimates.




Our
      critical accounting policies are those that affect our financial statements
      materially and involve a significant level of judgment by
      management.




The
      Company has adopted the policy of capitalizing the cost of its imaging equipment
      and depreciating the cost against earnings over the straight line method using
      an estimated useful life of five years. Because the useful life of any new
      technology is difficult to estimate due to factors such as competition,
      obsolescence, government regulations, etc., this accounting estimate is
      reasonably likely to change from period to period with a material impact on
      our
      financial statements. The significance of the accounting estimate to the
      Company's financial statements is that the equipment on the balance sheet is
      stated at cost less accumulated amortization and the corresponding depreciation
      is an expense on the statement of operations. The estimate as to the useful
      life
      of these assets will directly affect the carrying amount on the balance sheet
      and the expense for depreciation recorded in the statement of operations.
      Accordingly, shareholders' equity and earnings will be materially
      affected.




**Revenue
      Recognition**




Revenue
      will be recognized as earned per the licensing agreements which provide for
      a
      fixed fee for each thermal imaging camera we install. The revenue is recognized
      in the month that the camera is in use at the customer's facility.




14




**Derivative
      Instruments**




In
      connection with the sale of debt or equity instruments, we may sell options
      or
      warrants to purchase our common stock. In certain circumstances, these options
      or warrants may be classified as derivative liabilities, rather than as equity.
      Additionally, the debt or equity instruments may contain embedded derivative
      instruments, such as conversion options, which in certain circumstances may
      be
      required to be bifurcated from the associated host instrument and accounted
      for
      separately as a derivative instrument liability.




The
      identification of, and accounting for, derivative instruments is complex. Our
      derivative instrument liabilities are re-valued at the end of each reporting
      period, with changes in the fair value of the derivative liability recorded
      as
      charges or credits to income, in the period in which the changes occur. For
      options, warrants and bifurcated conversion options that are accounted for
      as
      derivative instrument liabilities, we determine the fair value of these
      instruments using the Black-Scholes option pricing model. That model requires
      assumptions related to the remaining term of the instruments and risk-free
      rates
      of return, our current common stock price and expected dividend yield, and
      the
      expected volatility of our common stock price over the life of the option.
      Because of the limited trading history for our common stock, we have estimated
      the future volatility of our common stock price based on not only the history
      of
      our stock price but also the experience of other entities considered comparable
      to us. The identification of, and accounting for, derivative instruments and
      the
      assumptions used to value them can significantly affect our financial
      statements.




**Registration
      Rights Agreements**




In
      connection with the sale of debt or equity instruments, we may enter into
      Registration Rights Agreements. Generally, these Agreements require us to file
      registration statements with the Securities and Exchange Commission to register
      common shares that may be issued on conversion of debt or preferred stock,
      to
      permit re-sale of common shares previously sold under an exemption from
      registration or to register common shares that may be issued on exercise of
      outstanding options or warrants.




The
      Agreements usually require us to pay penalties for any time delay in filing
      the
      required registration statements, or in the registration statements becoming
      effective, beyond dates specified in the Agreement. These penalties are usually
      expressed as a fixed percentage, per month, of the original amount we received
      on issuance of the debt or preferred stock, common shares, options or warrants.
      We account for these penalties as a contingent liability and not as a derivative
      instrument. Accordingly, we recognize the penalties when it becomes probable
      that they will be incurred. Any penalties are expensed over the period to which
      they relate.




**Recent
      Accounting Pronouncements**




Emerging
      Issues Task Force Pronouncement 00-27, relating to certain convertible
      instruments, requires the discounting of certain debt instruments when the
      conversion feature meets certain criteria. FASB 123R, Stock Options To Employees
      And Consultants. This pronouncement relates to employees and consultants who
      receive stock based pay.




The
      Company will account for the fair value of employee and non-employee options
      and
      warrants in accordance with SFAS No. 123R, "Share-Based Payment", which is
      effective for options and warrants during the annual reporting period beginning
      after December 15, 2005. The compensation cost will be measured after the grant
      date based on the value of the reward and is recognized over the service period.
      The fair value of each option grant is estimated on the date of the grant using
      the Black-Scholes stock option pricing model. The Company has not yet adopted
      a
      stock option plan but is evaluating the affect of a stock option plan on its
      financial position and results of operations in future periods.




15




**Liquidity
      and Capital Resources**




As
      of
      July 31, 2007 we had a working capital deficit of approximately $1,821,690,
      and
      cash of approximately $64,791. Through the end of July 2007, we have generated
      minimal revenues and have incurred operating losses in every quarter. We plan
      to
      achieve positive cash flow by obtaining additional financing and by installing
      thermal imaging equipment units under our Licensing Agreements. We expect
      significant camera expenditures during the next 12 months, which we will fund
      out of cash flows, company reserves, or by raising additional funds specifically
      for the purchase of cameras. By adjusting our operations and development to
      the
      level of capitalization, we believe we have sufficient capital resources to
      meet
      our projected cash flow projections. We anticipate that we will be able to
      satisfy our cash requirements with our currently available resources through
      the
      second quarter of our 2008 fiscal year.




The
      liquidity impact of our outstanding debt is as follows:




Our
      secured convertible note with Andrew W. Thompson (the "Thompson Note"), in
      the
      principal amount of $400,000, matured on April 11, 2006 and remains outstanding.
      We are in default pursuant to the terms of the Thompson Note, although we have
      not received a notice of default from Mr. Thompson, nor has Mr. Thompson
      indicated to the Company that he intends to place the Company in default under
      the loan agreement. Interest on the Thompson Note is at the rate of 8% plus
      the
      prevailing margin rate charged to the lender, which is currently 7.625%. If
      these rates remain at these levels, the accrued interest at maturity will exceed
      $108,365. The lender has the option of converting the loan into fully registered
      common stock at a discount of 40% on the day of conversion, which is the
      prepayment date or the due date, whichever occurs first. Additionally, the
      lender also received warrants to purchase 1,000,000 shares of the company's
      fully registered common stock at an exercise price of $0.50 per share. If the
      lender converts, the Company will issue the appropriate number of shares and
      will not be required to use cash to liquidate the debt. Additionally, the
      Company will receive the cash proceeds in the amount of $500,000 if the lender
      exercises the $0.50 warrants. On November 10, 2006, the Thompson Note was
      amended to include a provision stipulating that the holder may not convert
      the
      secured convertible note if such conversion or exercise would cause him to
      own
      more than 9.99% of our outstanding common stock. However, this restriction
      does
      not prevent the holder from converting a portion of the note and then converting
      the rest of the note. In this way, the holder could sell more than this limit
      while never holding more than this limit.




Our
      unsecured demand note with Michael Sweeney (the "Sweeney Note"), in the
      principal amount of $150,000, matured on August 1, 2006 and remains outstanding.
      In addition to the outstanding principal, we also owe accrued interest in the
      amount of $18,250. We are in default pursuant to the terms of the Sweeney Note
      and we have not received a notice of default from Mr. Sweeney, nor has Mr.
      Sweeney indicated to the Company that he intends to place the Company in default
      under the note.




Our
      unsecured demand note with Micro Health Systems (the "MHS Note"), dated December
      21, 2005 in the principal amount of $200,000, with interest at 8% per annum,
      has
      two maturity dates: at the 180th day and the 365th day following issuance.
      A
      payment of $100,000.00 is due at each maturity date. We did not make the first
      or second payment. There is an acceleration provision in the MHS Note
      stipulating that the entire $200,000.00 was due upon non-payment of the first
      $100,000. The interest rate then goes to the highest rate allowed by Florida
      law. We received a notice of default from MHS on November 28, 2006 but no
      further action has been taken. The MHS Note is secured by a pledge of 1.5
      million shares of the Company's treasury stock.




To
      obtain
      funding for our ongoing operations, we entered into
      several  Securities Purchases Agreement with four accredited investors
      - AJW Partners, LLC, AJW Qualified Partners, LLC, AJW Offshore, Ltd. and New
      Millennium Partners II, LLC.




The
      first debenture was executed on October 31, 2005 for the sale of (i) $3,000,000
      in secured convertible notes and (ii) warrants to buy 5,000,000 shares of our
      common stock. The gross financing proceeds were paid to the Company in three
      separate tranches of $1,000,000 each. The first tranche of the financing, in
      the
      amount of $1,000,000, was received by the Company upon closing. The second
      tranche was received on January 20, 2006. The third tranche was received as
      follows:$500,000 in July 2006 and $500,000 in August 2006.




The
      second debenture was executed on November 30, 2006 for the sale of (i) $400,000
      in secured convertible notes and (ii) warrants to buy 4,000,000 shares of our
      common stock. The gross financing proceeds were paid to the Company upon
      closing.




The
      third
      debenture was executed on March 26, 2007 for the sale of (i) $165,000 in secured
      convertible notes and (ii) warrants to buy 1,000,000 shares of our common stock.
      The gross financing proceeds were paid to the Company upon closing.




The
      fourth debenture was executed on May 30, 2007 for the sale of (i) $435,000
      in
      secured convertible notes and (ii) warrants to buy 10,000,000 shares of our
      common stock. The gross financing proceeds were paid to the Company upon
      closing.




The
      fifth
      debenture was executed on October 12, 2007 for the sale of (i) $175,000 in
      secured convertible notes and (ii) warrants to buy 15,000,000 shares of our
      common stock. The gross financing proceeds were paid to the Company upon
      closing.




16




The
      secured convertible notes issued pursuant to our October 2005 Securities
      Purchase Agreement bear interest at 8%, mature three years from the date of
      issuance, and are convertible into our common stock, at the selling
      stockholders' option, at the lower of (i) $0.12 or (ii) a 40% discount to the
      average of the three lowest intraday trading prices for the common stock on
      a
      principal market for the 20 trading days before but not including the conversion
      date. As of October 25, 2007, the average of the three lowest intraday trading
      prices for our common stock during the preceding 20 trading days as reported
      on
      the Over-The-Counter Bulletin Board was $.0123 and, therefore, the conversion
      price for the secured convertible notes was $.00738. Based on this conversion
      price, the $2,799,380 outstanding principal amount of the secured convertible
      notes, excluding interest, were convertible into approximately 379,000,000
      shares of our common stock. The stock purchase warrants have an exercise price
      of $0.50 per share. If the lender converts, the Company will issue the
      appropriate number of shares and will not be required to use cash to liquidate
      the debt. Additionally, the Company will receive cash proceeds in the amount
      of
      $2,500,000 if the lender exercises the $0.50 warrants. If the lender converts,
      the Company will issue the appropriate number of shares and will not be required
      to use the cash to liquidate the debt.




The
      secured convertible notes issued pursuant to our November 2006 Securities
      Purchase Agreement bear interest at 8%, mature three years from the date of
      issuance, and are convertible into our common stock, at the selling
      stockholders' option, at the lower of (i) $0.12 or (ii) a 40% discount to the
      average of the three lowest intraday trading prices for the common stock on
      a
      principal market for the 20 trading days before but not including the conversion
      date. As of October 25, 2007, the average of the three lowest intraday trading
      prices for our common stock during the preceding 20 trading days as reported
      on
      the Over-The-Counter Bulletin Board was $.0123 and, therefore, the conversion
      price for the secured convertible notes was $.00738. Based on this conversion
      price, the $400,000 outstanding principal amount of the secured convertible
      notes, excluding interest, were convertible into approximately 54,000,000 shares
      of our common stock. The stock purchase warrants have an exercise price of
      $0.08
      per share. If the lender converts, the Company will issue the appropriate number
      of shares and will not be required to use cash to liquidate the debt.
      Additionally, the Company will receive cash proceeds in the amount of $320,000
      if the lender exercises the $0.08 warrants. If the lender converts, the Company
      will issue the appropriate number of shares and will not be required to use
      the
      cash to liquidate the debt.




The
      secured convertible notes issued pursuant to our March 2007 Securities Purchase
      Agreement bear interest at 8%, mature three years from the date of issuance,
      and
      are convertible into our common stock, at the selling stockholders' option,
      at
      the lower of (i) $0.12 or (ii) a 40% discount to the average of the three lowest
      intraday trading prices for the common stock on a principal market for the
      20
      trading days before but not including the conversion date. As of October 25,
      2007, the average of the three lowest intraday trading prices for our common
      stock during the preceding 20 trading days as reported on the Over-The-Counter
      Bulletin Board was $.0123 and, therefore, the conversion price for the secured
      convertible notes was $.00738. Based on this conversion price, the $165,000
      outstanding principal amount of the secured convertible notes, excluding
      interest, were convertible into approximately 22,000,000 shares of our common
      stock. The stock purchase warrants have an exercise price of $0.03 per share.
      If
      the lender converts, the Company will issue the appropriate number of shares
      and
      will not be required to use cash to liquidate the debt. Additionally, the
      Company will receive cash proceeds in the amount of $30,000 if the lender
      exercises the $0.03 warrants. If the lender converts, the Company will issue
      the
      appropriate number of shares and will not be required to use the cash to
      liquidate the debt.




The
      secured convertible notes issued pursuant to our May 2007 Securities Purchase
      Agreement bear interest at 8%, mature three years from the date of issuance,
      and
      are convertible into our common stock, at the selling stockholders' option,
      at
      the lower of (i) $0.12 or (ii) a 40% discount to the average of the three lowest
      intraday trading prices for the common stock on a principal market for the
      20
      trading days before but not including the conversion date. As of October 25,
      2007, the average of the three lowest intraday trading prices for our common
      stock during the preceding 20 trading days as reported on the Over-The-Counter
      Bulletin Board was $.0123 and, therefore, the conversion price for the secured
      convertible notes was$.00738. Based on this conversion price, the $435,000
      outstanding principal amount of the secured convertible notes, excluding
      interest, were convertible into approximately 59,000,000shares of our common
      stock. The stock purchase warrants have an exercise price of $0.02 per share.
      If
      the lender converts, the Company will issue the appropriate number of shares
      and
      will not be required to use cash to liquidate the debt. Additionally, the
      Company will receive cash proceeds in the amount of $200,000 if the lender
      exercises the $0.02 warrants. If the lender converts, the Company will issue
      the
      appropriate number of shares and will not be required to use the cash to
      liquidate the debt.




17




The
      secured convertible notes issued pursuant to our October 2007 Securities
      Purchase Agreement bear interest at 8%, mature three years from the date of
      issuance, and are convertible into our common stock, at the selling
      stockholders' option, at the lower of (i) $0.12 or (ii) a 40% discount to the
      average of the three lowest intraday trading prices for the common stock on
      a
      principal market for the 20 trading days before but not including the conversion
      date. As of October 25, 2007, the average of the three lowest intraday trading
      prices for our common stock during the preceding 20 trading days as reported
      on
      the Over-The-Counter Bulletin Board was $.0123 and, therefore, the conversion
      price for the secured convertible notes was$.00738.Based on this conversion
      price, the $175,000 outstanding principal amount of the secured convertible
      notes, excluding interest, were convertible into approximately 24,000,000shares
      of our common stock. The stock purchase warrants have an exercise price of
      $0.0001 per share. If the lender converts, the Company will issue the
      appropriate number of shares and will not be required to use cash to liquidate
      the debt. Additionally, the Company will receive cash proceeds in the amount
      of
      $1,500 if the lender exercises the $0.0001 warrants. If the lender converts,
      the
      Company will issue the appropriate number of shares and will not be required
      to
      use the cash to liquidate the debt.




The
      registration statement we filed to register the shares underlying the
      convertible notes and warrants was declared effective by the Securities &
Exchange Commission on August 4, 2006 (File No. 333-130295).




We
      presently do not have any available credit, bank financing or other external
      sources of liquidity. Due to our brief operating history and startup, our
      operations have not been a source of liquidity. We will need to obtain
      additional capital in order to expand operations. We estimate that we will
      require additional cash resources, based on our current operating plans, in
      order to expand our operations. We are currently investigating other financial
      alternatives, including additional equity and/or debt financing. In order to
      obtain capital, we may need to sell additional shares of our common stock or
      borrow funds from private lenders. However, there can be no assurance that
      that
      any additional financing will become available to us, and if available, on
      terms
      acceptable to us.




**RISK
      FACTORS**




An
      investment in our shares involves a high degree of risk. Before making an
      investment decision, you should carefully consider all of the risks described
      in
      this prospectus. If any of the risks discussed in this prospectus actually
      occur, our business, financial condition and results of operations could be
      materially and adversely affected. If this were to happen, the price of our
      shares could decline significantly and you may lose all or a part of your
      investment. The risk factors described below are not the only ones that may
      affect us. Our forward-looking statements in this prospectus are subject to
      the
      following risks and uncertainties. Our actual results could differ materially
      from those anticipated by our forward-looking statements as a result of the
      risk
      factors below. See "Forward-Looking Statements."




**Risks
      Relating to Our Business:**




We
      Have a
      Limited Operating History, Which May Negatively Impact Our Ability to Achieve
      Our Business Objectives.




We
      have
      no operating history. We cannot assure you that we can achieve or sustain
      profitability on a quarterly or annual basis in the future. As of July 31,
      2007,
      we had an accumulated deficit of $7,378,654. Our operations are subject to
      the
      risks and competition inherent in the establishment of a business enterprise.
      Unanticipated problems, expenses, and delays are frequently encountered in
      establishing a new business and marketing and developing products. These
      include, but are not limited to, competition, the need to develop customers
      and
      market expertise, market conditions, sales, marketing and governmental
      regulation. Our failure to meet any of these conditions would have a materially
      adverse effect upon us and may force us to reduce or curtail our operations.
      There can be no assurance that future operations will be profitable. Revenues
      and profits, if any, will depend upon various factors, including whether we
      will
      be able to continue expansion of our thermal imaging operations. We may not
      achieve our business objectives and the failure to achieve such goals would
      have
      an adverse impact on us.




18




If
      We Are
      Unable to Obtain Additional Funding, Our Business Operations Will be Harmed.
      In
      Addition, Section 4e of the October 2005 Securities Purchase Agreements Contains
      Certain Restrictions and Limitations on Our Ability to Seek Additional
      Financing. If We Do Obtain Additional Financing, Our Then Existing Shareholders
      May Suffer Substantial Dilution.




We
      will
      require additional funds to sustain and expand our sales and marketing
      activities. Additional capital will be required to effectively support the
      operations and to otherwise implement our overall business strategy. In order
      to
      implement our business strategy over the next 12 months, we anticipate that
      we
      will require approximately $9.4 million dollars in additional funds. We
      anticipate that these additional funds would be used to restructure existing
      debt ($4.6 million), purchase additional thermal imaging equipment ($2.4
      million) and for working capita ($2.4 million).




Without
      the prior written consent of a majority-in-interest of the investors for a
      period ending on the later of (i) 270 days from the closing date, or (ii) 180
      days from the date that this registration statement is declared effective by
      the
      SEC, Section 4e of our October 2005 Securities Purchase Agreement limits our
      ability to seek additional financing, including negotiating or contracting
      with
      any party to obtain additional equity financing (including debt financing with
      an equity component) which involves the following:




o
      the
      issuance of shares of our common stock at a discount to the market price on
      the
      date of issuance;




o
      the
      issuance of convertible securities that are convertible into an indeterminate
      number of shares of our common stock; or




o
      the
      issuance of warrants to purchase shares of our common stock.




There
      can
      be no assurance that financing will be available in amounts or on terms
      acceptable to us, if at all, or if a majority-in-interest of the investors
      under
      our October 2005 Securities Purchase Agreement will provide their prior written
      consent for us to engage in additional financing involving the issuance of
      our
      securities as set forth above. The inability to obtain additional capital will
      restrict our ability to grow and may reduce our ability to continue to conduct
      business operations. If we are unable to obtain additional financing, we will
      likely be required to curtail our marketing and development plans and possibly
      cease our operations. Any additional equity financing may involve substantial
      dilution to our then existing shareholders.




If
      We Are
      Unable to Retain the Services of John Antonio or If We Are Unable to
      Successfully Recruit Qualified Personnel Having Experience in Business, We
      May
      Not Be Able to Continue Our Operations.




Our
      success depends to a significant extent upon the continued service of John
      Antonio, our current President and a Director. Loss of the services of Mr.
      Antonio could have a material adverse effect on our growth, revenues, and
      prospective business. We have applied for a "key man" life insurance policy
      on
      the life of Mr. Antonio in the amount of $3,000,000. In addition, in order
      to
      successfully implement and manage our business plan, we will be dependent upon,
      among other things, successfully recruiting qualified personnel having
      experience in business. Competition for qualified individuals is intense. There
      can be no assurance that we will be able to find, attract and retain existing
      employees or that we will be able to find, attract and retain qualified
      personnel on acceptable terms.




In
      addition, each of our executive officers is involved in the business activities
      of other companies. As a result, each of our executive officers may not be
      able
      to devote their full time, attention and energy to our Company, which could
      have
      a negative impact on their ability to effectively manage our
      Company.




19




If
      We Are
      Not Able to Successfully Market and Gain Public Awareness of Our Products and
      Services, We May Sustain Substantial Losses Which Could Require Us to Curtail
      or
      Cease Our Operations.




Achieving
      market awareness and acceptance for products being introduced and under
      development requires substantial marketing efforts and expenditure of
      significant marketing and advertising funds. There is uncertainty as to the
      rate
      of sales expansion and the degree of market acceptance of our products. Because
      of this, we are currently developing and evaluating, and anticipate that we
      will
      continue to develop, marketing and advertising for such new products or
      services; we will devote resources, financial and otherwise to such efforts.
      The
      failure of these efforts could result in substantial losses.




**We
      May Not Be Able To Compete Successfully.**




A
      number
      of companies have developed, or are expected to develop, products that compete
      or will compete with our products. Many of these competitors offer a range
      of
      products in areas other than those in which we compete, which may make such
      competitors more attractive to hospitals, radiology clients, general purchasing
      organizations and other potential customers. In addition, many of our
      competitors and potential competitors are larger and have greater financial
      resources than we do and offer a range of products broader than our products.
      Some of the companies with which we now compete or may compete in the future
      have or may have more extensive research, marketing and manufacturing
      capabilities and significantly greater technical and personnel resources than
      we
      do, and may be better positioned to continue to improve their technology in
      order to compete in an evolving industry.




Our
      Delay
      or Inability To Obtain Any Necessary U.S. or Foreign Regulatory Clearances
      Or
      Approvals For Our Products Could Harm Our Business And Prospects.




Our
      medical imaging products are the subject of a high level of regulatory
      oversight. Any delay in our obtaining or our inability to obtain any necessary
      US or foreign regulatory approvals for new products could harm our business
      and
      prospects. There is a limited risk that any approvals or clearances, once
      obtained, may be withdrawn or modified which could create delays in shipping
      our
      product, pending re-approval. Medical devices cannot be marketed in the US
      without clearance or approval by the FDA. Our business and the business of
      our
      key suppliers, including the manufacturers of the thermal imaging cameras
      marketed by us, must be operated in compliance with FDA Good Manufacturing
      Practices, which regulate the design, manufacture, packing, storage and
      installation of medical devices. These manufacturing facilities and our business
      practices are subject to periodic regulatory audits and quality certifications
      and we do self audits to monitor our compliance. In general, corrective actions
      required as a result of these audits do not have a significant impact on our
      supplier's manufacturing operations; however there is a limited risk that delays
      caused by a potential response to extensive corrective actions could impact
      our
      operations. Virtually all of our products manufactured or sold overseas are
      also
      subject to approval and regulation by foreign regulatory and safety agencies.
      If
      we do not obtain these approvals, we could be precluded from selling our
      products or required to make modifications to our products which could delay
      bringing our products to market.




**We
      Must Rapidly Develop New Products In Order To Compete
      Effectively.**




Technology
      in our industry, particularly in the x-ray and medical imaging businesses,
      evolves rapidly, and making timely product innovations is essential to our
      success in the marketplace. Also, our technology is approved as an adjunctive
      medical procedure to be used in conjunction with other diagnostic techniques
      such as mammography, X-Ray, CT and MRI, not as a stand alone diagnostic tool.
      The introduction by our competitors of products with improved technologies
      or
      features may render our existing products obsolete and unmarketable. If we
      cannot develop products in a timely manner in response to industry changes,
      or
      if our products do not perform well, our business and financial condition will
      be adversely affected. Also, our new products may contain defects or errors
      which give rise to product liability claims against us or cause the products
      to
      fail to gain market acceptance. Additionally, market acceptance is a function
      of
      the acceptance of thermograph as an emerging technology by field practioners.
      Accuracy in imaging, development of a data base from which practitioners can
      draw statistically verifiable conclusions and market resistance to change all
      impact on our ability to compete effectively.




20




Our
      Success is Dependant Upon Our Ability to Adequately Protect Our Trade Secrets,
      Know-How, Patents and Trademarks.




We
      own
      the following intellectual property: proprietary software controlling image
      quality, data compilation and facility billing information. Where patent
      protection is not available, we rely for protection of our intellectual property
      on trade secret law and nondisclosure and confidentiality agreements with our
      employees and others. There can be no assurance that such agreements will
      provide meaningful protection for our trade secrets or proprietary know-how
      in
      the event of any unauthorized use or disclosure of such trade secrets or
      know-how. In addition, others may obtain access to or independently develop
      technologies or know-how similar to ours.




Our
      success will also depend on our ability to avoid infringement of patent or
      other
      proprietary rights of others. We are not aware that we are infringing any patent
      or other such rights, nor are we aware of proprietary rights of others for
      which
      we will be required to obtain a license in order to develop our products.
      However, there can be no assurance that we are not infringing proprietary rights
      of others, or that we will be able to obtain any technology licenses we may
      require in the future.




We
      Rely
      on Contractual Relationships. The Loss of One or More of These Contractual
      Relationships Could Have an Adverse Effect On Our Business.




We
      rely
      on key contractual relationships with our customers, including Natural Horizons
      Wellness Center Fairfax, Surgicenters of America, Inc. and Spineonumics. We
      also
      rely on a key contractual relationship with the supplier of our thermal imaging
      equipment, Mikron Instrument Co. If we were to lose any or all of these
      contractual relationships, our ability to maintain or increase revenues could
      be
      adversely affected. There can be no assurance that our key contractual
      relationships will continue to exist.




Any
      Future Acquisitions Could Disrupt Our Existing Business and Harm Our Financial
      Position.




An
      element of our growth strategy includes the acquisition of companies which
      we
      believe have synergistic business models. Acquisitions entail a number of risks
      that could materially and adversely affect business and operating results.
      Such
      risks would include problems integrating the acquired operations, technologies
      or products; diversion of management's time and attention from core businesses;
      difficulties in retaining business relations with suppliers and customers of
      the
      acquired company; risks associated with entering markets in which our management
      lacks prior experience, and potential loss of key employees from the acquired
      company.




If
      healthcare providers do not receive adequate reimbursement for procedures using
      our products, the market may not accept our products and our revenues may
      decline.




The
      success of our products will depend upon the ability of healthcare providers,
      such as physicians, hospitals, pain clinics and imaging centers, to obtain
      satisfactory reimbursement for medical procedures in which our thermal imaging
      systems are used. Use of the TMI thermal imaging system for its current FDA
      approved uses is not covered by any third-party insurer. If healthcare providers
      are unable to obtain reimbursement from third-party payors, the market may
      not
      accept our products and our revenues may decline. Moreover, we are unable to
      predict what additional legislation or regulation, if any, relating to the
      health care industry or third-party coverage and reimbursement may be enacted
      in
      the future, or what effect such legislation or regulation would
      have.




21




**Risks
      Relating to Our Current Financing Arrangement:**




There
      Are
      a Large Number of Shares Underlying Our Secured Convertible Notes and Warrants
      That May be Available for Future Sale and the Sale of These Shares May Depress
      the Market Price of Our Common Stock.




As
      of
      October 25, 2007 we had 126,166,117 shares of common stock issued and
      outstanding, secured convertible notes outstanding that may be converted into
      an
      estimated 538,000,000 shares of common stock based on a conversion price of
      $.00738, and related warrants to purchase 35,000,000 shares of common stock
      at
      an exercise price of $0.0001 to $0.50. In addition, the number of shares of
      common stock issuable upon conversion of the outstanding secured convertible
      notes may increase if the market price of our stock declines. All of the shares
      issuable upon conversion of the secured convertible notes issued pursuant to
      our
      October 2005 through October 2007 Securities Purchase Agreements and upon
      exercise of our warrants, may be sold without restriction. The sale of these
      shares may adversely affect the market price of our common stock.




The
      Continuously Adjustable Conversion Price Feature of the Secured Convertible
      Notes Issued Pursuant to Our October 31, 2005 through October 2007 Private
      Placement Could Require Us to Issue a Substantially Greater Number of Shares,
      Which Will Cause Dilution to Our Existing Stockholders.




Our
      obligation to issue shares upon conversion of our secured convertible notes
      is
      essentially limitless. The following is an example of the amount of shares
      of
      our common stock that are issuable, upon conversion of the principal amount
      of
      our secured convertible notes, based on market prices 25%, 50% and 75% below
      the
      market price as of July 26, 2007of $.015.




%
                Below
            
            
            Price
                Per
            
            
            With
                Discount
            
            
            Number
            
            
            %
                ofMarket
            
            
            Share
            
            
            at
                40%
            
            
            of
                 Shares
            
            
            Outstanding25
            %
            
            $
            .01125
            
            
            $
            .00675
            
            
            
            588,797,000
            
            
            
            467
            %50
            %
            
            $
            .0075
            
            
            $
            .0045
            
            
            
            883,196,000
            
            
            
            700
            %75
            %
            
            $
            .00375
            
            
            $
            .00225
            
            
            
            1,766,391,000
            
            
            
            1,400
            %




As
      illustrated, the number of shares of common stock issuable upon conversion
      of
      our secured convertible notes will increase if the market price of our stock
      declines, which will cause dilution to our existing stockholders.




The
      Continuously Adjustable Conversion Price Feature of our Secured Convertible
      Notes May Have a Depressive Effect on the Price of Our Common
      Stock.




The
      secured convertible notes issued pursuant to our October 2005 Securities
      Purchase Agreement and our October 2005 Convertible Term Loan Agreement are
      convertible into shares of our common stock at a 40% discount to the trading
      price of the common stock prior to the conversion. The significant downward
      pressure on the price of the common stock as the selling stockholders convert
      and sell material amounts of common stock could have an adverse effect on our
      stock price. In addition, not only the sale of shares issued upon conversion
      or
      exercise of secured convertible notes and warrants, but also the mere perception
      that these sales could occur, may adversely affect the market price of the
      common stock.




22




The
      Issuance of Shares Upon Conversion of the Secured Convertible Notes and Exercise
      of Outstanding Warrants May Cause Immediate and Substantial Dilution to Our
      Existing Stockholders.


The
        issuance of shares upon conversion of the secured convertible notes and exercise
        of warrants may result in substantial dilution to the interests of other
        stockholders since the selling stockholders may ultimately convert and sell
        the
        full amount issuable on conversion. Although AJW Partners, LLC, AJW Qualified
        Partners, LLC, AJW Offshore, Ltd., and New Millennium Partners II, LLC may
        not
        convert their secured convertible notes and/or exercise their warrants if
        such
        conversion or exercise would cause them to own more than 4.99% of our
        outstanding common stock, this restriction does not prevent AJW Partners,
        LLC,
        AJW Qualified Partners, LLC, AJW Offshore, Ltd., and New Millennium Partners
        II,
        LLC from converting and/or exercising some of their holdings and then converting
        the rest of their holdings. In this way, AJW Partners, LLC, AJW Qualified
        Partners, LLC, AJW Offshore, Ltd., and New Millennium Partners II, LLC could
        sell more than this limit while never holding more than this limit. There
        is no
        upper limit on the number of shares that may be issued which will have the
        effect of further diluting the proportionate equity interest and voting power
        of
        holders of our common stock, including investors in this offering.
  In
        The
        Event That Our Stock Price Declines, The Shares Of Common Stock Allocated
        For
        Conversion Of The Secured Convertible Notes and Registered Pursuant To Our
        Registration Statement on Form SB-2 (File No. 333-130295) May Not Be Adequate
        And We May Be Required to File A Subsequent Registration Statement Covering
        Additional Shares. If The Shares We Have Allocated And Are Registering Herewith
        Are Not Adequate And We Are Required To File An Additional Registration
        Statement, We May Incur Substantial Costs In Connection Therewith.
  Based
        on
        our current market price and the potential decrease in our market price as
        a
        result of the issuance of shares upon conversion of the secured convertible
        notes, we have made a good faith estimate as to the amount of shares of common
        stock that we are required to register and allocate for conversion of the
        secured convertible notes. In the event that our stock price decreases, the
        shares of common stock we have allocated for conversion of the secured
        convertible notes and are registering hereunder may not be adequate. If the
        shares we have allocated to the registration statement are not adequate and
        we
        are required to file an additional registration statement, we may incur
        substantial costs in connection with the preparation and filing of such
        registration statement.
  If
        We Are
        Required for any Reason to Repay Our Outstanding Secured Convertible Notes,
        We
        Would Be Required to Deplete Our Working Capital, If Available, Or Raise
        Additional Funds. Our Failure to Repay the Secured Convertible Notes, If
        Required, Could Result in Legal Action Against Us, Which Could Require the
        Sale
        of Substantial Assets.
  In
        October 2005, we entered into a Securities Purchase Agreement for the sale
        of an
        aggregate of $3,000,000 principal amount of secured convertible notes, of
        which
        $2,860,000 remains outstanding. The secured convertible notes are due and
        payable, with 8% interest, three years from the date of issuance, unless
        sooner
        converted into shares of our common stock. Any event of default such as our
        failure to repay the principal or interest when due, our failure to issue
        shares
        of common stock upon conversion by the holder, our failure to timely file
        a
        registration statement or have such registration statement declared effective,
        breach of any covenant, representation or warranty in the Securities Purchase
        Agreement or related convertible note, the assignment or appointment of a
        receiver to control a substantial part of our property or business, the filing
        of a money judgment, writ or similar process against our company in excess
        of
        $50,000, the commencement of a bankruptcy, insolvency, reorganization or
        liquidation proceeding against our company could require the early repayment
        of
        the secured convertible notes, including a default interest rate of 15% on
        the
        outstanding principal balance of the notes if the default is not cured with
        the
        specified grace period. We anticipate that the full amount of the secured
        convertible notes will be converted into shares of our common stock, in
        accordance with the terms of the secured convertible notes. If we were required
        to repay the secured convertible notes, we would be required to use our limited
        working capital and raise additional funds. If we were unable to repay the
        notes
        when required, the note holders could commence legal action against us and
        foreclose on all of our assets to recover the amounts due. Any such action
        would
        require us to curtail or cease operations.
  21
  If
        an
        Event of Default Occurs under the Securities Purchase Agreement, Secured
        Convertible Notes, Warrants, Security Agreement or Intellectual Property
        Security Agreement, the Investors Could Take Possession of all Our Goods,
        Inventory, Contractual Rights and General Intangibles, Receivables, Documents,
        Instruments, Chattel Paper, and Intellectual Property.
  In
        connection with the Securities Purchase Agreements we entered into in October
        2005, we executed a Security Agreement and an Intellectual Property Security
        Agreement in favor of the investors granting them a first priority security
        interest in all of our goods, inventory, contractual rights and general
        intangibles, receivables, documents, instruments, chattel paper, and
        intellectual property. The Security Agreements and Intellectual Property
        Security Agreements state that if an even of default occurs under the Securities
        Purchase Agreement, Secured Convertible Notes, Warrants, Security Agreements
        or
        Intellectual Property Security Agreements, the Investors have the right to
        take
        possession of the collateral, to operate our business using the collateral,
        and
        have the right to assign, sell, lease or otherwise dispose of and deliver
        all or
        any part of the collateral, at public or private sale or otherwise to satisfy
        our obligations under these agreements.
  **Risks
        Relating to Our Common Stock:**
  Our
        Common Stock is Subject to the "Penny Stock" Rules of the SEC and the Trading
        Market in Our Securities is Limited, Which Makes Transactions in Our Stock
        Cumbersome and May Reduce the Value of an Investment in Our Stock.
  The
        Securities and Exchange Commission has adopted Rule 15g-9 which establishes
        the
        definition of a "penny stock," for the purposes relevant to us, as any equity
        security that has a market price of less than $5.00 per share or with an
        exercise price of less than $5.00 per share, subject to certain exceptions.
        For
        any transaction involving a penny stock, unless exempt, the rules
        require:
  o
        that a
        broker or dealer approve a person's account for transactions in penny stocks;
        and
  o
        the
        broker or dealer receive from the investor a written agreement to the
        transaction, setting forth the identity and quantity of the penny stock to
        be
        purchased.
  In
        order
        to approve a person's account for transactions in penny stocks, the broker
        or
        dealer must:
  o
        obtain
        financial information and investment experience objectives of the person;
        and
  o
        make a
        reasonable determination that the transactions in penny stocks are suitable
        for
        that person and the person has sufficient knowledge and experience in financial
        matters to be capable of evaluating the risks of transactions in penny stocks.
        The broker or dealer must also deliver, prior to any transaction in a penny
        stock, a disclosure schedule prescribed by the Commission relating to the
        penny
        stock market, which, in highlight form:
  o
        sets
        forth the basis on which the broker or dealer made the suitability
        determination; and
  o
        that
        the broker or dealer received a signed, written agreement from the investor
        prior to the transaction.
  Generally,
        brokers may be less willing to execute transactions in securities subject
        to the
        "penny stock" rules. This may make it more difficult for investors to dispose
        of
        our common stock and cause a decline in the market value of our
        stock.
  Disclosure
        also has to be made about the risks of investing in penny stocks in both
        public
        offerings and in secondary trading and about the commissions payable to both
        the
        broker-dealer and the registered representative, current quotations for the
        securities and the rights and remedies available to an investor in cases
        of
        fraud in penny stock transactions. Finally, monthly statements have to be
        sent
        disclosing recent price information for the penny stock held in the account
        and
        information on the limited market in penny stocks.
  **Item
        7. FINANCIAL STATEMENTS**
  All
        financial information required by this Item is attached hereto beginning
        on Page
        F-1.
  22
  **WELLSTAR
          INTERNATIONAL, INC. AND SUBSIDIARY**
 
 **CONSOLIDATED
          FINANCIAL STATEMENTS**
 
 **JULY
          31, 2007 AND 2006**
 
 
 
 
 
 **CONTENTS**
 
   **PAGE**REPORT
                  OF INDEPENDENT REGISTERED
                  PUBLIC
                    ACCOUNTING FIRM
                F-iCONSOLIDATED
                  BALANCE SHEETS
                F-1
                      - F-2CONSOLIDATED
                    STATEMENTS OF OPERATIONS
                F-3CONSOLIDATED
                  STATEMENTS OF CHANGES IN
                  STOCKHOLDERS=
                    EQUITY (DEFICIT)
                F-4CONSOLIDATED
                    STATEMENTS OF CASH FLOWS
                F-5,
                    F-6NOTES
                    TO CONSOLIDATED FINANCIAL STATEMENTS
                F-7
                    - F-22
  
  **To
          The Board of Directors**
 **Wellstar
          International, Inc.**
 **Holland,
          Ohio 43528**
 
 
 **Report
          of Independent Registered
          Public Accounting Firm**
 
 We
          have
          audited the accompanying consolidated balance sheets of Wellstar International,
          Inc. and Subsidiary as of July 31, 2007 and 2006  and the related
          consolidated statements of operations, changes in stockholders equity (deficit)
          and cash flows for the years ended July 31, 2007 and 2006.  The
          financial statements are the responsibility of the Company's
          management.  Our responsibility is to express an opinion on the
          financial statements based on our audits.
 
 We
          conducted our audits in accordance with the Standards of the Public Company
          Accounting Oversite Board (United States).  Those standards require
          that we plan and perform the audits to obtain reasonable assurance about
          whether
          the financial statements is free of material misstatement.  An audit
          includes examining, on a test basis, evidence supporting the amounts and
          disclosures in the financial statements.  An audit also includes
          assessing the accounting principles used and significant estimates made
          by
          management, as well as evaluating the overall financial statement
          presentation.  We believe that our audits provides a reasonable basis
          for our opinion.
 
 In
          our
          opinion, the financial statements referred to above presents fairly, in
          all
          material respects, the financial position of Wellstar International, Inc.
          and
          Subsidiary as of July 31, 2007and 2006, and the results of their operations
          and
          their cash flows for the years ended July 31, 2007 and 2006 in conformity
          with
          accounting principles generally accepted in the United States of
          America.
 
 The
          accompanying consolidated financial statements have been prepared assuming
          that
          the Company will continue as a going concern.  As discussed in Note 7
          to the consolidated financial statements, the Company had a net loss of
          $3,654,117, negative cash flow from operations of $1,545,660, negative
          working
          capital of $1,821,690, and a stockholder's deficiency of $7,378,654 at
          July 31,
          2007.  These matters raise substantial doubt about the Company's
          ability to continue as a going concern.  Management's plan in regards
          to these matters is also described in Note 7.  The accompanying
          consolidated financial statements do not include any adjustments that might
          result from the outcome of this uncertainty.
 
 
 
 Simontacchi
          & Company, LLP
 Rockaway,
          New Jersey
 November
          8, 2007
 
 
 F-i
 
 
 **WELLSTAR
          INTERNATIONAL, INC. AND SUBSIDIARY**
 **CONSOLIDATED
          BALANCE SHEETS**
 **JULY
          31, 2007 AND 2006**
 
 
 **ASSETS**
  **2007**
                
                
                **2006****Current
                  Assets:**Cash
                
                $
                64,791
                
                
                $
                245,268Accounts
                    Receivable
                
                
                50,000
                
                
                
                6,100Prepaid
                    Expenses
                
                
                12,624
                
                
                
                12,124Rent
                    Refund Receivable
                
                
                1,580
                
                
                
                1,174**Total
                    Current Assets**
                
                
                128,995
                
                
                
                264,666**Fixed
                  Assets:**Imaging
                    Equipment
                
                
                505,761
                
                
                
                457,977Office
                    Equipment and Fixtures
                
                
                150,354
                
                
                
                148,166Subtotal
                
                
                656,115
                
                
                
                606,143Less:
                  Accumulated Depreciation
                
                
                197,921
                
                
                
                68,525**Net
                    Fixed Assets**
                
                
                458,194
                
                
                
                537,618**Intangible
                  Assets:**Covenant
                    Not To Compete
                
                
                20,000
                
                
                
                20,000Manufacturing
                    and Distribution Agreement
                
                
                700,000
                
                
                
                700,000Subtotal
                
                
                720,000
                
                
                
                720,000Less:
                  Accumulated Amortization
                
                
                221,141
                
                
                
                83,868**Net
                    Intangible Assets**
                
                
                498,859
                
                
                
                636,132**Other
                  Assets:**Loan
                    Acquisition Cost (net of amortization of $167,663@
                    7/31/07 and $137,565 @ 7/31/06)
                
                
                69,862
                
                
                
                57,460Software
                    and Manuals (net of amortization of $65,425
                
                
                54,575
                
                
                
                55,562@
                    7/31/07 and $24,438 @ 7/31/06)Security
                    Deposit
                
                
                4,425
                
                
                
                1,580**Total
                    Other Assets**
                
                
                128,862
                
                
                
                114,602**Total
                    Assets**
                
                $
                1,214,910
                
                
                $
                1,553,018
  See
          Accompanying Notes to Consolidated Financial Statements
  F-1
 
 **WELLSTAR
          INTERNATIONAL, INC. AND SUBSIDIARY**
 **CONSOLIDATED
          BALANCE SHEETS**
 **JULY
          31, 2007 AND 2006**
 
 
 **LIABILITIES
          LESS SHAREHOLDER'SDEFICIT**
 
 
 
 ****
 **2007**
                  
                  
                  **2006****Current
                    Liabilities:**Accounts
                      Payable
                  
                  $
                  140,380
                  
                  
                  $
                  35,757Accrued
                      Expenses
                  
                  
                  724,294
                  
                  
                  
                  332,503Loan
                      Payable - Other
                  
                  
                  500
                  
                  
                  
                  -Notes
                      Payable
                  
                  
                  750,000
                  
                  
                  
                  750,000Derivative
                      Instrument Liability  - Loan
                  
                  
                  335,511
                  
                  
                  
                  295,861**Total
                      Current Liabilities**
                  
                  
                  1,950,685
                  
                  
                  
                  1,414,121**Long
                    Term Lia****bilities:**Convertible
                      Debt
                  
                  
                  119,486
                  
                  
                  
                  11,536Derivative
                      Instrument Liability - Convertible Notes
                  
                  
                  6,310,525
                  
                  
                  
                  3,781,773Derivative
                      Instrument Liability - Warrants
                  
                  
                  212,868
                  
                  
                  
                  750,179**Total
                      Long-Term Liabilities**
                  
                  
                  6,642,879
                  
                  
                  
                  4,543,488**Total
                      Liabilities**
                  
                  
                  8,593,564
                  
                  
                  
                  5,957,609**Stockholders
                    Deficit:**Common
                      StockAuthorized
                      200,000,000 Shares, par value .001 per shareIssued
                      Shares,120,583,975 - Outstanding Shares,119,083,975
                      (7/31/07) and 80,100,000 (7/31/06)
                  
                  
                  119,084
                  
                  
                  
                  80,100Paid
                      in Surplus
                  
                  
                  1,102,545
                  
                  
                  
                  461,475Retained
                      Earnings (Deficit)
                  
                  
                  (8,600,283
                  )
                  
                  
                  (4,946,166
                  )**Total
                      Shareholders Deficit**
                  
                  
                  (7,378,654
                  )
                  
                  
                  (4,404,591
                  )**Total
                      Liabilities Less Stockholder's Deficit**
                  
                  $
                  1,214,910
                  
                  
                  $
                  1,553,018
  See
          Accompanying Notes to Consolidated Financial Statements
  F-2
 
 **WELLSTAR
          INTERNATIONAL, INC. AND SUBSIDIARY**
 **CONSOLIDATED
          STATEMENTS OF OPERATIONS**
 **FOR
          THE YEARS ENDED JULY 31, 2007 AND 2006**
 
 
 ****
  **2007**
                  
                  
                  **2006****Income**:Revenue
                      from License Agreement
                  
                  $
                  100,000
                  
                  
                  $
                  -Revenue
                      from Medical Imaging
                  
                  
                  1,500
                  
                  
                  
                  21,475Total
                      Revenue
                  
                  
                  101,500
                  
                  
                  
                  21,475Cost
                    of Sales
                  
                  
                  100
                  
                  
                  
                  140,795**Gross
                      Profit (Loss)**
                  
                  
                  101,400
                  
                  
                  
                  (119,320
                  )**Operating
                    Expenses:**Selling,
                      General and Administrative
                  
                  
                  2,095,515
                  
                  
                  
                  1,724,693Depreciation
                      and Amortization
                  
                  
                  337,754
                  
                  
                  
                  314,396**Total
                      Operating Expenses**
                  
                  
                  2,433,269
                  
                  
                  
                  2,039,089**Loss
                    from Operations**
                  
                  
                  (2,331,869
                  )
                  
                  
                  (2,158,409
                  )**Other
                    Expense (Income):**Interest
                      Income
                  
                  
                  (7,947
                  )
                  
                  
                  (3,279
                  )Interest
                      Expense
                  
                  
                  375,159
                  
                  
                  
                  106,624Derivative
                      Instrument Expense, Net
                  
                  
                  839,662
                  
                  
                  
                  2,339,349Delinquent
                      Stock RegistrationPenalty
                      - Convertible Debentures
                  
                  
                  115,374
                  
                  
                  
                  180,000**Total
                      Other Expenses (Income)**
                  
                  
                  1,322,248
                  
                  
                  
                  2,622,694**Loss
                    before Provision for Taxes**
                  
                  
                  (3,654,117
                  )
                  
                  
                  (4,781,103
                  )Provision
                      for Taxes
                  
                  
                  -
                  
                  
                  
                  -**Net
                      Loss**
                  
                  $
                  (3,654,117
                  )
                  
                  $
                  (4,781,103
                  )**Net
                    Loss Per Share,**Basic and Diluted
                  
                  $
                  (.04
                  )
                  
                  $
                  (.06
                  )**Weighted
                    Average Number of Common Shares****Outstanding,
                      Basic and Diluted**
                  
                  
                  98,852,685
                  
                  
                  
                  78,143,288
   See
          Accountants' Report and Accompanying Notes to Financial Statements
  F-3
 
 **WELLSTAR
          INTERNATIONAL, INC. AND SUBSIDIARY**
 **CONSOLIDATED
          STATEMENTS OF CHANGES IN**
 **STOCKHOLDERS
          EQUITY (DEFICIT)**
 **FOR
          THE YEARS ENDED JULY 31, 2007 AND 2006**
 
 
 **Common
                  Stock****Shares**
                
                
                **Amount**
                
                
                **Additional
                    Paid in Capital**
                
                
                **Accumulated**
                  **Deficit**
                
                
                **Total**Balance,
                  July 31, 2005
                
                
                75,000,000
                
                
                $
                75,000
                
                
                $
                90,000
                
                
                $
                (165,063
                )
                
                $
                (63
                )Common
                  Stock - Issued for Services
                
                
                2,100,000
                
                
                
                2,100
                
                
                
                54,475
                
                
                
                
                
                
                
                56,575Common
                  Stock - Issued in Acquisition
                
                
                2,000,000
                
                
                
                2,000
                
                
                
                198,000
                
                
                
                
                
                
                
                200,000Common
                  Stock - Issued as Loan Acquisition Costs
                
                
                1,000,000
                
                
                
                1,000
                
                
                
                119,000
                
                
                
                
                
                
                
                120,000**Net
                  Loss for the Period**
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                (4,781,103
                )(4,781,103
                )Balance,
                  July 31, 2006
                
                
                80,100,000
                
                
                
                80,100
                
                
                $
                461,475
                
                
                
                
                
                
                $
                (4,404,591
                )(4,946,166
                )Stock
                  Issued to Consultants for Services
                
                
                9,609,975
                
                
                
                9,610
                
                
                
                131,171
                
                
                
                
                
                
                
                140,781Stock
                  Issued to Employees
                
                
                4,300,000
                
                
                
                4,300
                
                
                
                60,200
                
                
                
                
                
                
                
                64,500(3,654,117
                )Conversion
                  of Debentures
                
                
                25,074,000
                
                
                
                25,074
                
                
                
                449,699
                
                
                
                
                
                
                
                474,773$
                (8,600,283
                )**Net
                  Loss for the Period**
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                (3,654,117
                )Balance,
                  July 31, 2007
                
                
                119,083,975
                
                
                $
                119,084
                
                
                $
                1,102,545
                
                
                
                
                
                
                $
                (7,378,654
                )
  See
          Accountants' Report and Accompanying Notes to Financial Statements
  F-4
 
 **WELLSTAR
          INTERNATIONAL, INC. AND SUBSIDIARY**
 **CONSOLIDATED
          STATEMENTS OF CASH FLOWS**
 **FOR
          THE YEARS ENDED JULY 31, 2007 AND 2006**
 
 
  **2007**
                
                
                **2006****Cash
                  Flows from Operating Activities:**Net
                    Loss
                
                $
                (3,654,117
                )
                
                $
                (4,781,103
                )Adjustments
                    to Reconcile Net Loss to Net Cash usedin
                    Operating Activities:Depreciation
                    and Amortization
                
                
                337,754
                
                
                
                314,396Delinquent
                    Registration Penalty ConvertibleDebentures
                
                
                115,374
                
                
                
                180,000Services
                    Paid in Stock
                
                
                205,281
                
                
                
                56,575Interest
                    Paid in Stock
                
                
                274,152
                
                
                
                -Derivative
                    Instrument Expense, Net
                
                
                839,662
                
                
                
                2,339,349Changes
                    in Operating Assets and Liabilities:Increase
                    (Decrease) In:Accounts
                    Receivable
                
                
                (43,900
                )
                
                
                (6,100
                )Prepaid
                    Expenses
                
                
                (500
                )
                
                
                (12,124
                )Rent
                    Refund Receivable
                
                
                (406
                )
                
                
                (1,174
                )Accounts
                    Payable
                
                
                104,623
                
                
                
                35,757Accrued
                    Expenses
                
                
                276,417
                
                
                
                152,503**Net
                  Cash Used in Operating Activities**
                
                
                (1,545,660
                )
                
                
                (1,721,921
                )**Cash
                  Flows from Investing Activities:**Purchase
                    of Equipment
                
                
                (49,972
                )
                
                
                (606,143
                )Purchase
                    of Software
                
                
                (40,000
                )
                
                
                -Security
                    Deposit
                
                
                (2,845
                )
                
                
                (1,580
                )Acquisition
                    of Assets
                
                
                -
                
                
                
                (400,000
                )**Net
                    Cash Used in Investing Activities**
                
                
                (92,817
                )
                
                
                (1,007,723
                )**Cash
                  Flows From Financing Activities:**Payments
                    of Financing Costs
                
                
                (42,500
                )
                
                
                (75,025
                )Proceeds
                    from Issuance of Convertible Notes
                
                
                1,500,000
                
                
                
                2,900,000Other
                    Loan
                
                
                500
                
                
                
                -Officer=s
                    Loan
                
                
                -
                
                
                
                (50
                )**Net
                    Cash Provided by Financing Activities**
                
                
                1,458,000
                
                
                
                2,824,925**Net
                  (Decrease) Increase in Cash**
                
                
                (180,477
                )
                
                
                95,281**Cash
                  at Beginning of Period**
                
                
                245,268
                
                
                
                149,987**Cash
                    at End of Period**
                
                $
                64,791
                
                
                $
                245,268**Cash
                  Paid for Interest**
                
                $
                -
                  0
                  -
                
                
                $
                -
                  0
                  -**Cash
                    Paid for Taxes**
                
                $
                -
                    0
                    -
                
                
                $
                -
                    0
                    -
  
  
 See
          Accountants' Report and Accompanying Notes to Financial Statements
 
 F-5
 **WELLSTAR
          INTERNATIONAL, INC. AND SUBSIDIARY**
 **CONSOLIDATED
          STATEMENTS OF CASH FLOWS**
 **FOR
          THE YEARS ENDED JULY 31, 2007 AND 2006**
 
 
 
 
 **Supplemental
          Disclosure of Non-Cash Investing and Financing Activities:**
 
 
 1.
                During
                    the year ended July 31, 2007, stock purchase warrants exercisable
                    for
                    15,833,334 shares of Common Stock were issued in connection with
                    a closing
                    on $1,500,000 of convertible notes had no cash
                    effect.
 
 2.
                13,909,975
                    shares of Common Stock was issued for services rendered.  The
                    amount was $205,281.
 
 3.
                During
                    the year ended July 31, 2007, convertible debentures and related
                    accrued
                    interest in the amount of $474,773 were converted into25,074,000
                    shares of
                    Common Stock.
 
 4.
                During
                    the year ended July 31, 2007 and 2006, delinquent registration
                    penalties
                    of $115,374 and $180,000, respectively, were recorded, no cash
                    was
                    expended.
 
 5.
                During
                    the year ended July 31, 2006, stock purchase warrants exercisable
                    for
                    4,166,667 shares of Common Stock were issued in connection with
                    a closing
                    on $2,500,000 of convertible notes had no cash
                    effect.
 
 6.
                5,100,000
                    shares of Common Stock was issued July 31, 2006 in the following
                    transactions; an acquisition, for services and for a loan
                    fee.  The amount was
                    $376,575.
 
 7.
                Note
                    payable of $200,000 in Acquisition of Assets resulted in no cash
                    being
                    expended as of July 31, 2006.
 
 
 
 See
          Accountants' Report and Accompanying Notes to Financial Statements
  F-6
 
 **WELLSTAR
          INTERNATIONAL, INC. AND SUBSIDIARY**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
          OF JULY 31, 2007 AND 2006**
 
 
 
 
 **NOTE
                    1**
                **Summary
                    of Significant Accounting Policies and
                    Organization**
 
 **a)**
                **Organization
                    and Recent Company History**
 
 Wellstar
          International, Inc. (the ACompany@)
          was incorporated December 15, 1997, under the laws of the State of
          Nevada.  Through its wholly owned subsidiary, Trillennium Medical
          Imaging, Inc. (ATMI@),
          is developing and licensing the use of advanced thermal imaging
          technology.
 
 **b)**
                **Principles
                    of Consolidation**
 
 The
          consolidated financial statements include the accounts of Wellstar
          International, Inc. and its wholly owned subsidiary, Trillennium Medical
          Imaging, Inc. (collectively, the Company).
 
 **c)**
                **Revenue
                    Recognition**
 
 The
          Company recognizes revenues utilizing the accrual method of
          accounting.  More specifically, the Company enters into licensing
          agreements for its advanced thermal imaging technology.  Under the
          licensing agreements, the Company supplies the camera equipment, related
          software and training for each facility.  Once the facility is
          operational, the licensing agreement provides for a fixed fee monthly fee
          for
          the use of the camera.  Accordingly, the revenue is recognized in the
          month that the camera is in use at the customer=s
          facility, which represents the Company=s
          right to receive the fixed fee.  The Company=s
          revenue recognition policy is in compliance with the provisions of EITF
          00-21.
 
 **d)**
                **Use
                    of Estimates**
 
 The
          preparation of financial statements in conformity with generally accepted
          accounting principles requires management to make estimates and assumptions
          that
          affect the amounts reported in the financial statements and accompanying
          notes.  Although these estimates are based on management=s
          knowledge of current events and actions it may undertake in the future,
          they may
          ultimately differ from actual results.
 
 **e)**
                **Cash**
 
 For
          the
          purpose of the Statements of Cash Flows, cash is defined as balances held
          in
          corporate checking accounts and money market accounts.
 
 F-7
  **WELLSTAR
          INTERNATIONAL, INC. AND SUBSIDIARY**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
          OF JULY 31, 2007 AND 2006**
 
 
 
 **NOTE
                    1**
                **Summary
                    of Significant Accounting Policies and Organization**(cont'd)
 
 f)
                **Loss
                    Per Share**
 
 Basic
          and
          diluted net loss per common share for the years ended July 31, 2007 and
          2006 are
          computed based upon the weighted average number of common shares
          outstanding.  The assumed conversion of Common Stock equivalents was
          not included in the computation of diluted loss per share because the assumed
          conversion and exercise would be anti-dilutive due to the net loss
          incurred.  Based on the conversion formula in the Agreements (see Note
          2 and 3) on the conversion of its convertible notes would have resulted
          in the
          issuance of additional common shares in the amount of 611,999,203, on July
          31,
          2007.
 
 **g)**
                **Stock
                    Based Compensation**
 
 Stock
          based compensation will be valued in accordance with SFAS 123(R) under
          the Fair
          Valued based method.  Compensation cost is measured at the grant date
          based on the value of the award and is recognized over the service period
          which
          is usually the vesting period.  Transactions with non-employees shall
          be accounted for based on the Fair Value of the consideration received
          or Fair
          Value of the equity installments issued, whichever is more reliably
          measurable.
 
 **h)**
                **Derivative
                    Instruments**
 
 In
          connection with the sale of debt or equity instruments, we may sell options
          or
          warrants to purchase our Common Stock.  In certain circumstances,
          these options or warrants may be classified as derivative liabilities,
          rather
          than as equity.  Additionally, the debt or equity instruments may
          contain embedded derivative instruments, such as conversion options, which
          in
          certain circumstances may be required to be bifurcated from the associated
          host
          instrument and accounted for separately as a derivative instrument
          liability.
 
 The
          identification of, and accounting for, derivative instruments is
          complex.  Our derivative instrument liabilities are re-valued at the
          end of each reporting period, with changes in the fair value of the derivative
          liability recorded as charges or credits to income, in the period in which
          the
          changes occur.  For options, warrants and bifurcated conversion
          options that are accounted for as derivative instrument liabilities, we
          determine the fair value of these instruments using the Black -Scholes
          option
          pricing model.  That model requires assumptions related to the
          remaining term of the instrument and risk-free rates of return, our current
          Common Stock price and expected dividend yield, and the expected volatility
          of
          our Common Stock price over the life of the option.
  F-8
  **WELLSTAR
          INTERNATIONAL, INC. AND SUBSIDIARY**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
          OF JULY 31, 2007 AND 2006**
  **NOTE
                    1**
                **Summary
                    of Significant Accounting Policies and Organization**(cont'd)
 
 **i)**
                **Income
                    Taxes**
 
 The
          Company will provide for income taxes based on the provisions of Financial
          Accounting Standards Board (AFASB@)
          Statements of Financial Accounting Standards No. 109 (ASFAS
          No. 109"), AAccounting
          for Income Taxes@,
          which requires recognition of deferred tax assets and liabilities for the
          expected future tax consequences of events that have been included in the
          financial statements and tax returns in different years.  Under this
          method, deferred income tax assets and liabilities are determined based
          on the
          difference between the financial statements and tax basis of assets and
          liabilities using enacted tax rates in effect for the year in which the
          differences are expected to reverse.
 
 **j)**
                **Concentration
                    of Credit Risk**
 
 Financial
          instruments which potentially subject the Company to concentrations of
          credit
          risk consists of a checking account with a financial institution in excess
          of
          insured limits.  There was no excess above insured limits at July 31,
          2007.  The Company does not anticipate non-performance by the
          financial institution.
 
 **k)**
                **Fair
                    Value of Financial
                    Instruments**
 
 Carrying
          amounts of certain of the Company=s
          financial instruments, including cash and cash equivalents, accounts receivable
          and accounts payable approximate fair value because of their short
          maturities.
 
 **l)**
                **Equipment**
 
 Imaging
          and office equipment are recorded at cost and depreciated on the straight
          line
          method with an estimated life of five (5) years.  Imaging equipment is
          at the customers facility where the equipment is used or stored by the
          Company
          until placed in use.  The Company retains title to the imaging
          equipment while it is at the customers location.  Depreciation expense
          for the years ended July 31, 2007 and 2006 were $129,396 and $68,525,
          respectively.
 
 **m)**
                **Intangible
                    Assets**
 
 Loan
          acquisition costs are stated at cost and relate to the costs of acquiring
          the
          convertible notes (see Note 2) and to obtaining the $400,000 Note Payable
          (see
          Note 3).  Amortization is provided for under the straight line method
          over three (3) years, which is the term of the convertible notes and six
          months
          for the original term of the Note Payable. Total amortization for the years
          ended July 31, 2007 and 2006 were $30,098 and $137,565,
          respectively.
 
 F-9
  **WELLSTAR
          INTERNATIONAL, INC. AND SUBSIDIARY**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
          OF JULY 31, 2007 AND 2006**
 
  **NOTE
                    1**
                **Summary
                    of Significant Accounting Policies and Organization**(cont'd)
 
 **m)**
                **Intangible
                    Assets** (cont=d)
 
 Software
          and manuals, Covenant Not To Compete and Manufacturing & Distribution
          Agreement acquired in the acquisition of Micro Health Systems, Inc. (See
          Note 3)
          with cost of $80,000, $20,000 and $700,000 respectively are being amortized
          over
          a 24 month period for the software and the Covenant and 5 2
          years for the manufacturing and distribution agreement. The total amortization
          expense for the years ended July 31, 2007 and 2006 were $178,260 and $108,306,
          respectively.
 
 **n)**
                **Derivative
                    Instruments**
 
 Because
          of the limited trading history of our Common Stock, we have estimated the
          future
          volatility of our Common Stock price based on not only the history of our
          stock
          price but also the experience of other entities considered comparable to
          us.  The identification of, and accounting for, derivative instruments
          and the assumptions used to value them can significantly affect our financial
          statements.
 
 **o)**
                **Registration
                    Rights Agreements**
 
 In
          connection with the sale of debt or equity instruments, we may enter into
          Registration Rights Agreements.  Generally, these Agreements require
          us to file registration statements with the Securities and Exchange Commission
          to register common shares that may be issued on conversion of debt or preferred
          stock, to permit re-sale of common shares previously sold under an exemption
          from registration or to register common shares that may be issued on exercise
          of
          outstanding options or warrants.
 
 The
          Agreements usually require us to pay penalties for any time delay in filing
          the
          required registration statements, or in the registration statements becoming
          effective, beyond dates specified in the Agreement.  These penalties
          are usually expressed as a fixed percentage, per month, of the original
          amount
          we received on issuance of the debt or preferred stock, common shares,
          options
          or warrants.  We account for these penalties as a contingent liability
          and not as a derivative instrument.  Accordingly, we recognize the
          penalties when it becomes probable that they will be incurred.  Any
          penalties are expenses over the period to which they relate.
 
 F-10
 
 **WELLSTAR
          INTERNATIONAL, INC. AND SUBSIDIARY**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
          OF JULY 31, 2007 AND 2006**
 
 
 **NOTE
                    2**
                **Convertible
                    Notes**
 
 On
          October 31, 2005, the Company entered into a Securities Purchase Agreement
          with
          AJW Partners, LLC and its related entities for the sale of $3,000,000 of
          8%
          secured convertible notes, each advance is evidenced by a note which is
          due
          three years from the date of the advance, and for stock purchase warrants
          exercisable for a total of  5,000,000 shares of Common Stock each
          issuance of warrants expiring on the fifth anniversary from the date of
          issue.  The warrants are issued at the time funds are advanced at
          1,666,667 per $1 million advanced.  The notes are convertible, at the
          holder=s
          option, into shares of Common Stock, in whole or in part, at any time after
          the
          original issue date.  No interest shall be due and payable for any
          month in which the Company=s
          stock trading price is greater than $0.1125 for each trading day of the
          month.
 
 The
          number of shares of Common Stock issuable upon a conversion is to be determined
          by dividing the outstanding principal amount of the notes to be converted,
          plus
          related accrued interest, by the conversion price.  The conversion
          price in effect on any conversion date will be at the selling stockholder=s
          option, at the lower of(i) $0.12 or (ii) a 40% discount to the average
          of the
          three lowest intraday trading prices for the Common Stock on a principal
          market
          for the twenty trading days preceding, but not including, the conversion
          date.  The total shares at July 31, 2007 were
          555,514,203.
 
 The
          stock
          purchase warrants have an exercise price of $0.50 per share.
 The
          Company has closed on the entire $3,000,000 of convertible notes contemplated
          by
          the Securities Purchase Agreement and issued stock purchase warrants exercisable
          for 5,000,000 shares of Common Stock in connection therewith.  The
          dates of the advance of the funds of $1 million each were October 31, 2005
          and
          January 20, 2006 and $500,000 each on July 25, 2006 and August 8, 2006.
          The
          stock registration was effective August 4, 2006.
 
 On
          November 30, 2006, the Company entered into an additional securities purchase
          agreement with AJW Partners, LLC and its related entities for the sale
          of
          $400,000 of 8% secured convertible notes due November 30, 2009, and for
          stock
          purchase warrants of 4,000,000 shares of Common Stock exercisable at anytime
          at
          $.08 per share, expiring on the seventh anniversary from the date of issue,
          November 30, 2013.
 
 The
          funds
          were advanced on November 30, 2006, in the amount of $392,500, less a $7,500
          charge as a loan acquisition cost, amortized over the loan period of 36
          months.  The notes are convertible, at the holders option, into shares
          of Common Stock, in whole or in part, at any time after the original issue
          date.
  F-11
  
 **WELLSTAR
          INTERNATIONAL, INC. AND SUBSIDIARY**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
          OF JULY 31, 2007 AND 2006**
 
 
 **NOTE
                    2**
                **Convertible
                    Notes**(cont'd)
 
 No
          interest shall be due on any payable for any month in which the Company=s
          stock trading price is greater than $.0775 for each trading day of the
          month.  The notes are secured by all the assets and intellectual
          property of the Company.
 
 On
          March
          26, 2007, the Company entered into an additional securities purchase agreement
          with AJW Partners, LLC and its related entities for the sale of $165,000
          of 8%
          secured convertible notes due March 26, 2010, and for stock purchase warrants
          of
          1,000,000 shares of Common Stock exercisable at anytime at $.03 per share,
          expiring on the seventh anniversary from the date of issue, March 26,
          2014.
 
 The
          funds
          were advanced on March 26, 2007, in the amount of $150,000, less a $15,000
          charge as a loan acquisition cost, amortized over the loan period of 36
          months.  The notes are convertible, at the holders option, into shares
          of Common Stock, in whole or in part, at any time after the original issue
          date.   No interest shall be due on any payable for any month in
          which the Company=s
          stock trading price is greater than $.0775 for each trading day of the
          month.  The notes are secured by all the assets and intellectual
          property of the Company.
 
 On
          May
          30, 2007, the Company entered into an additional securities purchase agreement
          with AJW Partners, LLC and its related entities for the sale of $435,000
          of 8%
          secured convertible notes due May 30, 2010, and for stock purchase warrants
          of
          10,000,000 shares of Common Stock exercisable at anytime at $.02 per share,
          expiring on the seventh anniversary from the date of issue, May 30,
          2014.
 
 The
          funds
          were advanced on May 30, 2007, in the amount of $415,000, less a $20,000
          charge
          as a loan acquisition cost, amortized over the loan period of 36
          months.  The notes are convertible, at the holders option, into shares
          of Common Stock, in whole or in part, at any time after the original issue
          date.   No interest shall be due on any payable for any month in
          which the Company=s
          stock trading price is greater than $.0775 for each trading day of the
          month.  The notes are secured by all the assets and intellectual
          property of the Company.
 
 See
          Paragraph 2 of this note related to the terms of conversion.  The
          total shares at July 31, 2007, included in Paragraph 2 above, includes
          all
          additional convertible notes.
 
 All
          notes
          include a Registration Rights Agreement.  The Company was required to
          register additional shares in relation to all the additional agreements
          listed
          above, this was not done.  There is a penalty of 2% per month of the
          note amount, a penalty of $115,374 was accrued through July 31,
          2007.
  F-12
  **WELLSTAR
          INTERNATIONAL, INC. AND SUBSIDIARY**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
          OF JULY 31, 2007 AND 2006**
 
 
 **NOTE
                    2**
                **Convertible
                    Notes**(cont'd)
 
 In
          connection with the aforementioned issuance of the $1,000,000 of convertible
          notes, on October 31, 2005, the Company granted a first priority security
          interest in all the assets of the Company.  The issuance of
          convertible notes resulted in conversion features being accounted for as
          embedded derivative liabilities in accordance with EITF00-19 and SFAS 133
          (see
          Note 4).  The note holder=s
          have converted notes of $200,621 and accrued interest of $274,152 into
          25,074,000 shares of Common Stock as of July 31, 2007.  The balance of
          the notes are $3,799,379, at July 31, 2007. Interest due of $34,554 is
          included
          in Accrued Expenses.
 
 **NOTE
                    3**
                **Notes
                    Payable**
 
 a)
                The
                    Company has borrowed $150,000 from an unrelated individual.  The
                    Note is dated August 1, 2005.  The outstanding balance of the
                    loan shall bear monetary interest at the fixed rate of six percent
                    (6%)
                    simple, non-compounding interest payable in arrears per
                    annum.
 
 The
          outstanding balance of principal and interest is due and payable on demand
          on or
          after August 1, 2006.  All payments shall apply first to interest
          accrued and then principal.  The Company may prepay all or part
          without a pre-payment penalty.  The loan was not paid on August 1,
          2006 and was extended under the same terms by mutual
          agreement.  Interest due of $18,250 is included in Accrued
          Expenses.
 
 Default
          shall occur upon (1) failure to make payment on the note or transfer of
          stock
          when due, (2) Company institutes bankruptcy or solvency proceedings or
          make an
          assignment for the benefit of creditors.
 
 Note
                    Payable - Current
                $150,000
 
 b)
                The
                    Company has entered into a loan agreement with an unrelated
                    individual.  The note is dated October 11, 2005.  The
                    note provides for a total loan of $400,000, the Company received
                    $190,000
                    by October 31, 2005.  The balance of $210,000 was subsequently
                    received on November 29, 2005.  The note bears interest at a
                    fixed rate of 8%, plus the prevailing variable margin rate charged
                    to the
                    lender.  As of July 31, 2007, the margin rate was
                    7.625%.  The lender was paid a loan acquisition cost on December
                    5, 2005, in Common Stock of 1 million
                    shares.
 
 F-13
 
  **WELLSTAR
          INTERNATIONAL, INC. AND SUBSIDIARY**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
          OF JULY 31, 2007 AND 2006**
 
 
 **NOTE
                    3**
                **Notes
                    Payable**(cont=d)
 
 The
          cost
          was recorded at market value at the date of the loan which was $ .12 per
          share,
          for a total of $120,000.  The outstanding balance of principal and
          accrued interest was due and payable on April 11, 2006.  The note has
          been extended to February 28, 2007 by addendum under the current terms
          and
          interest is being accrued.  The addendum was signed on November 11,
          2006.  In consideration of the waiver and extension, the Company, with
          the signing, paid the lender $20,000.  The lender was also issued
          additional warrants to purchase 400,000 shares of common stock, 200,000
          at $0.10
          per share and 200,000 at $0.20 per share, which expire on February 28,
          2008. As
          of July 31, 2007, the note has not been paid.
 
 At
          July
          31, 2007, $108,365 of interest expense is included in Accrued
          Expenses.  As security for the loan, the Company has pledged all of
          its tangible and intangible assets.  Commencing on January 1, 2006,
          the Company shall establish an escrow account and shall deposit 25% of
          all
          proceeds generated by the thermal imaging cameras purchased with $210,000
          of
          proceeds from the loan.  The funds shall remain in escrow for use in
          paying all sums due to the lender.  To July 31, 2007, no funds have
          been put into escrow.
 
 In
          addition, the lender has the option to convert the loan into fully registered,
          unsecured Common Stock of the Company at a conversion price on the day
          of
          conversion, minus 40%.  The total shares at July 31, 2007 were
          56,485,000. The lender shall have the right to convert on the prepayment
          date or
          the due date, whichever occurs first.  The issuance of the notes and
          warrants resulted in conversion features being accounted for as embedded
          derivative liabilities in accordance with EITF00-19 and FASB 133 (see Note
          4).
 
 Balance
                    due at July 31, 2007 and 2006
                $400,000
 
 
 c)
                On
                    December 21, 2005, the Company completed the purchase of certain
                    assets of
                    Micro Health Systems, Inc. (AMHS@)
                    under a definitive agreement.
 
 Total
          consideration paid by the Company was $600,000, plus 2,000,000 shares of
          Restricted  Common Stock.  The Company paid $400,000 at
          closing.  A promissory note was executed for $200,000 with interest at
          8% per annum. $100,000 is due with accrued interest on or before the 180th day
          following the
          date of the Note which is June 19, 2006, with the balance of principal
          and
          interest due and payable on or before the 365th day
          following the
          date of the note.
 
 F-14
 **WELLSTAR
          INTERNATIONAL, INC. AND SUBSIDIARY**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
          OF JULY 31, 2007 AND 2006**
 
 
 
 **NOTE
                    3**
                **Notes
                    Payable**(cont'd)
 
 The
          2,000,000 shares of Restricted Common Stock were issued on December 21,
          2005 and
          priced at the market price of $ .10 per share for a total value of
          $200,000.  The cost was allocated as follows:
  Mikron
                  Manufacturing Distribution AgreementCustomer
                    List and Intangible Assets
                
                $
                700,000Tangible
                  Assets
                
                
                80,000Covenant
                    Not-To-Compete
                
                
                20,000Total
                
                $
                800,000
  In
          addition, 1,500,000 shares of Restricted Common Stock are being held in
          escrow
          as security for the note payable of $200,000.  These shares have been
          shown as issued but not outstanding.  The Company is in default on
          $200,000 of the Note Payable and interest of $4,000 which was due June
          19, 2006
          on the first $100,000 of notes due.  Due to the default, the interest
          charged from June 19, 2006 is 18% on the $200,000 Note
          Payable.  Interest expense of $43,013 is included in Accrued
          Expenses.
 
 
 On
          November 28, 2006, the Company received a letter due to the default, giving
          it
          ten (10) days to pay the note and accrued interest or the 1,500,000 shares
          held
          in escrow will be issued to the shareholder of Micro Health Systems,
          Inc.  As of July 31, 2007 and through November 8,
          2007,  nothing has transpired.
 
 Balance
                    due at July 31, 2007
                $200,000
 
 
 **NOTE
                    4**
                **Derivative
                    Financial Instrument
                    Liabilities**
 
 We
          use
          the Black-Scholes option pricing model to value options and warrants, and
          the
          embedded conversion option components of any bifurcated embedded derivative
          instruments that are recorded as derivative liabilities.  See Note 1,
          related to embedded derivative instruments accounting policy.
 
 In
          valuing the options and warrants and the embedded conversion option components
          of the bifurcated embedded derivative instruments, at the time they were
          issued
          and at July 31, 2007, we used the market price of our Common Stock on the
          date
          of valuation, an expected dividend yield of 0% and the remaining period
          to the
          expiration date of the options or warrants or repayment date of the convertible
          debt instrument.  All options, warrants and conversion options can be
          exercised by the holder at any time.
  F-15
 
 **WELLSTAR
          INTERNATIONAL, INC. AND SUBSIDIARY**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
          OF JULY 31, 2007 AND 2006**
 
 
 
 **NOTE
                    4**
                **Derivative
                    Financial Instrument
                    Liabilities**
  Because
          of the limited historical trading period of our Common Stock, the expected
          volatility of our Common Stock over the remaining life of the options and
          warrants has been estimated at 123%, based on a review of the historical
          volatility and of entities considered by management as
          comparable.  The risk-free rates of return used ranged from 4.55% to
          5.00%, based on constant maturity rates published by the U.S. Federal Reserve,
          applicable to the remaining life of the options or warrants.
  F-16
 **WELLSTAR
          INTERNATIONAL, INC. AND
          SUBSIDIARY**
 **NOTES
          TO CONSOLIDATED FINANCIAL
          STATEMENTS**
 **AS
          OF JULY 31, 2007 AND
          2006**
 
 
 
 **NOTE
                    4**
                **Derivative
                    Financial Instrument Liabilities**(cont'd)
 
 At
          July
          31, 2007, the following derivative liabilities related to Common Stock
          options
          and warrants and embedded derivative instruments were outstanding (see
          Notes 2
          and 3):
   **Issue
                    Date**
                **Expiry
                    Date**
                
                **No. of
                    Warrants**
                
                **Issued
                    To**
                
                **Exercise
                    Price Per Share**
                
                
                **Value
                    - Issue Date**
                
                
                **Value
                    - July 31, 2007**10/11/05
                04/11/06
                
                
                1,000,000
                
                Thompson
                
                $
                .50
                
                
                $
                41,526
                
                
                $
                011/19/06
                02/18/08
                
                
                200,000
                
                Thompson
                
                $
                .10
                
                
                
                3,845
                
                
                
                5611/19/06
                02/18/08
                
                
                200,000
                
                Thompson
                
                $
                .20
                
                
                
                2,276
                
                
                
                910/31/05
                10/31/10
                
                
                1,666,667
                
                AJW
                  Partners
                
                $
                .50
                
                
                
                169,629
                
                
                
                5,41501/20/06
                01/20/11
                
                
                1,666,667
                
                AJW
                  Partners
                
                $
                .50
                
                
                
                81,321
                
                
                
                6,14707/25/06
                07/25/11
                
                
                833,333
                
                AJW
                  Partners
                
                $
                .50
                
                
                
                146,197
                
                
                
                3,89208/04/06
                08/04/11
                
                
                833,333
                
                AJW
                  Partners
                
                $
                .50
                
                
                
                102,816
                
                
                
                3,94911/30/06
                11/30/13
                
                
                4,000,000
                
                AJW
                  Partners
                
                $
                .08
                
                
                
                158,741
                
                
                
                46,35903/26/07
                03/26/14
                
                
                1,000,000
                
                AJW
                  Partners
                
                $
                .03
                
                
                
                25,433
                
                
                
                12,96705/30/07
                05/30/14
                
                
                10,000,000
                
                AJW
                  Partners
                
                $
                .02
                
                
                
                163,409
                
                
                
                134,074**Fair
                  value of derivative instrument liabilities for
                  warrants**
                
                
                $
                895,193
                
                
                $
                212,868
  F-17
  **WELLSTAR
          INTERNATIONAL, INC. AND SUBSIDIARY**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
          OF JULY 31, 2007 AND 2006**
 
 
 
 **NOTE
                    4**
                **Derivative
                    Financial Instrument Liabilities**(cont'd)
  **Issue
                    Date**
                **Due**
                  **Date**
                
                **Note**
                  **Amount**
                
                **Instrument**
                **Exercise
                    Price Per Share**
                
                **Value
                    - Issue Date**
                
                
                **Value
                    - July 31, 2007**10/11/05
                04/11/06
                
                $
                400,000
                
                Loan
                Various
                
                $
                370,189
                
                
                $
                335,51110/31/05
                10/31/08
                
                
                1,000,000
                
                Convertible
                Various
                
                
                2,681,204
                
                
                
                1,239,473Notes01/20/06
                01/20/09
                
                
                1,000,000
                
                Convertible
                Various
                
                
                1,363,058
                
                
                
                1,598,289Notes07/25/06
                07/25/09
                
                
                500,000
                
                Convertible
                Various
                
                
                791,994
                
                
                
                845,296Notes08/04/06
                08/04/09
                
                
                500,000
                
                Convertible
                Various
                
                
                616,127
                
                
                
                848,366Notes11/30/06
                11/30/09
                
                
                400,000
                
                Convertible
                Various
                
                
                523,047
                
                
                
                697,347Notes03/26/07
                03/26/10
                
                
                165,000
                
                Convertible
                Various
                
                
                274,500
                
                
                
                294,848Notes05/30/07
                05/30/10
                
                
                435,000
                
                Convertible
                Various
                
                
                825,801
                
                
                
                786,906Notes**Fair
                  value of bifurcated embedded derivative instrument
                  liabilities**
                
                $
                7,445,920
                
                
                $
                6,646,036**Total
                  derivative financial instruments**
                
                $
                8,341,113
                
                
                $
                6,858,904
  F-18
  **WELLSTAR
          INTERNATIONAL, INC. AND SUBSIDIARY**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
          OF JULY 31, 2007 AND 2006**
 
 
 **NOTE
                    5**
                **Stockholder'sEquity (Deficit)**
 
 On
          August
          14, 2006, the Company issued 300,000 shares of Restricted Common Stock
          to
          various individuals for marketing services.  The number of shares of
          stock issued was at 30% of the market value.  The total recorded as
          Common Stock was $300 and additional paid in capital of $13,200. The amount
          of
          $13,500, the charge for the services rendered, is reflected as an expense
          in the Statements of Operations.
 
 On
          September 19, 2006, the Company issued 450,000 shares of Restricted Common
          Stock
          for medical consulting services.  The number of shares of stock issued
          was at 30% of the market value for the fair value of the service.  The
          total recorded as common stock was $450 and additional paid in capital
          of
          $9,540. $9,990 is reflected as medical consulting in the
          Statements  of Operations.
 
 On
          December 4, 2006, the Company issued 9,853,993 shares of Restricted Common
          Stock.  The number of shares of stock issued was at 30% of the market
          value.   4,300,000 shares were issued to employees, 1,353,993 for
          legal services and 4,200,000 for computer and financial consulting
          services.  The total recorded as Common Stock was $9,854 and
          additional paid in capital of $137,965.  A total of $147,819 is
          reflected as an expense in the Statements of Operations.
 
 During
          the quarter ended April 30, 2007, the Company issued 2,196,154 shares of
          Restricted Common Stock as follows, Financial Consulting, 400,000 shares,
          Medical Consulting, 1,200,000 shares and Legal Services, 596,154
          shares.  2,100,000 shares are at 75% of market value and 96,154 shares
          were at market value.  The total recorded as Common Stock was $2,196
          and additional paid in capital of $17,146.  A total of $19,342 is
          reflected as an expense in the Statements of Operations.
 
 During
          the quarter ended July 31, 2007, the Company issued 1,109,828 shares of
          Restricted Common Stock for legal services .  The shares were issued
          at market value.  The total was recorded as Common Stock was $1,110
          and additional paid-in capital of $13,520.  A total of $14,630 is
          reflected as an expense in the Statements of Operations.
 
 **NOTE
                    6**
                **Derivative
                    Instruments Income,
                    Net**
 
 Derivative
          instruments expense of $ 839,662 represents the net unrealized (non-cash)
          change
          during the year ended July 31, 2007, in the fair value of our derivative
          instrument liabilities related to certain warrants and embedded derivatives
          in
          our convertible debt that have been bifurcated and accounted for
          separately.
 
 F-19
 
 **WELLSTAR
          INTERNATIONAL, INC. AND SUBSIDIARY**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
          OF JULY 31, 2007 AND 2006**
 
 
 **NOTE
                    7**
                **Going
                    Concern**
 
 The
          accompanying consolidated financial statements have been prepared on a
          going
          concern basis, which contemplates the realization of assets and the settlement
          of liabilities and commitments in the normal course of business.
 
 As
          reflected in the accompanying consolidated financial statements, the Company
          had
          a net loss of $3,654,117 and a negative cash flow from operations of $1,545,660
          for the year ended July 31, 2007, negative working capital of $1,821,690,
          and a
          stockholder's deficiency of $7,378,654 at July 31, 2007.
 
 The
          ability of the Company to continue as a going concern is dependent on the
          Company's ability to raise additional funds and implement its business
          plan.  The accompanying consolidated financial statements do not
          include any adjustments that might be necessary if the Company is unable
          to
          continue as a going concern.
 
 Management's
          plans include the raising of additional capital through private or public
          transactions and implementation of its business and marketing plan to increase
          revenues.
 
 **NOTE
                    8**
                **Employee
                    Compensation Plan**
 
 In
          December 2006, the Company filed a Form S-8 to register 5,000,000 shares
          of
          common stock with a proposed offering price of $ .075 per share related
          to the
          formation of the Wellstar International, Inc. 2006 Employee Compensation
          Plan.  To date, no shares have been issued under this
          plan.
 
 **NOTE
                    9**
                **Limited
                    Technology License
                    Agreement**
 
 On
          July
          9, 2007, the Company's wholly owned subsidiary, Trillennium Medical Imaging,
          Inc., entered into a Limited Technology License Agreement with MacLath
          Ltd, a
          Costa Rican corporation.  Trillennium appointed MacLath Ltd to be the
          exclusive licensee of Trillennium to distribute Trillennium products and
          systems
          to those persons and entities as outlined in the Agreement for a renewable
          term
          of 25 years.
 
 Under
          the
          Agreement, Licensee is obligated to pay Trillennium ongoing payments of
          7% of
          gross revenues received by Licensee from any sale, lease or sub-licensing
          under
          the Agreement.  Licensee is also obligated to purchase and pay for a
          minimum of 50 Trillennium Systems, as defined in the Agreement, during
          the
          one-year period commencing on the effective date of the Agreement, and
          each
          succeeding one-year period throughout the term of the Agreement.
 
 F-20
  **WELLSTAR
          INTERNATIONAL, INC. AND SUBSIDIARY**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
          OF JULY 31, 2007 AND 2006**
 
 
 
 **NOTE
                    9**
                **Limited
                    Technology License Agreement**
                    (cont'd)
 
 The
          prices to be paid by Licensee for Trillennium products will be equal to
          the list
          price then published by the Trillennium product manufacturer, minus 7.5%,
          plus
          all applicable taxes or fees.
 
 The
          Licensee is in default as it has not made the required payments due under
          the
          Agreement.  The Licensee paid $100,000 which is not returnable, and
          has been recorded as Revenue in the Statements of Operations.
 
 **NOTE
                    10**
                **Compensated
                    Absences**
 
 There
          has
          been no liability accrued for compensated absences as in accordance with
          Company
          policy, all compensated absences, accrued vacation and sick pay must be
          used by
          December 31.  At July 31, 2007, any amount for accrual is not material
          and has not been computed.
 
 **NOTE
                    11**
                **Recently
                    Issued Accounting
                    Pronouncements**
 
 In
          September 2006, the Financial Accounting Standards Board (FASB) issued
          SFAS No.
          157, AFair
          Value Measurements@.  SFAS
          No. 157 provides a new single authoritative definition of fair value and
          enhanced guidance on measuring the fair value of assets and
          liabilities.  It requires additional disclosures related to the extent
          to which companies measure assets and liabilities at fair value, the information
          used to measure fair value, and the effect of fair value measurements on
          earnings.  SFAS No. 157 is effective for fiscal years beginning after
          November 15, 2007, and interim periods within those fiscal years.  The
          Company is currently evaluating what effect, if any, the adoption of SFAS
          No.
          157 will have on its financial position, results of operations, or cash
          flows.
 
 EITF
          Topic D-98, Classification and Measurement of Redeemable Securities, on
          March
          15, 2007, the SEC staff announced its position that requires preferred
          securities that are redeemable for cash or other assets to be classified
          outside
          of permanent equity if the stock is: (1) redeemable at a fixed or determinable
          price and date, (2) at the option of the holder and (3) conditions outside
          the
          control of the issuer.  The pronouncement currently has no effect on
          the Company.
 
 On
          December 21, 2006, the Financial Accounting Standards Board (FASB) posted
          FASB
          Staff Position (FSP) FSPEIFT00-19-2, Accounting for Registration Payment
          Arrangements.
 
 F-21
 
 **WELLSTAR
          INTERNATIONAL, INC. AND SUBSIDIARY**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
          OF JULY 31, 2007 AND 2006**
 
 
 **NOTE
                    11**
                **Recently
                    Issued Accounting Pronouncements**
                    (cont'd)
 
 The
          FSP
          specifies that the contingent obligation to make future payments or otherwise
          transfer consideration under a registration payment arrangement, whether
          issued
          as a separate agreement or included as a provision of a financial instrument
          or
          other agreement, should be separately recognized and measured in accordance
          with
          FASB Statement No. 5, Accounting for Contingencies.  The guidance in
          this FSP amends FASB Statement No. 133, Accounting for Derivative Instruments
          and Hedging Activities, and No. 150, Accounting for Certain Guarantor=s
          Accounting and Disclosure Requirements for Guarantees, including Indirect
          Guarantees of Indebtedness of Others, to include scope exceptions for
          registration payment arrangements.  This FSP further clarifies that a
          financial instrument subject to a registration payment arrangement should
          be
          accounted for in accordance with other applicable generally accepted accounting
          principles (GAAP) without regard to the contingent obligation to transfer
          consideration pursuant to the registration payment arrangement. The Company
          has
          accounted for registration payments as required under its securities purchase
          agreement and will follow this pronouncement effect from date of
          issue.
 
 **NOTE
                    12**
                **Lease
                    Agreement**
 
 On
          July
          17, 2007, Trillenium Medical Imaging, Inc., a wholly owned subsidiary,
          entered
          into a lease agreement with an unrelated party for a facility in New York
          City.  The lease replaced a prior lease in the same
          facility.  The lease is for a period of one year with a monthly rent
          of $4,175.  The lease expires July 16, 2008.  The Company
          incurred a rent expense of approximately $32,550 and $9,950 for the years
          ended
          July 31, 2007 and 2006, respectively.  Future rental payments under
          the lease for the year ended July 31, 2008 is $50,100.
 
 **NOTE
                    13**
                **Subsequent
                    Events**
 
 AJW
          Partners, LLC and related entities converted a portion of their notes (See
          Note
          2) into 900,000 shares of Common Stock during the period August 1, 2007
          through
          August 6, 2007.
 
 The
          Company issued to AJW Partners, LLC and related entities, under a securities
          purchase agreement, dated October 12, 2007, Callable Secured Convertible
          Notes
          in the amount of $175,000 with interest at 8% per annum, due 36 months
          from the
          date of issue, and 15 million Warrants convertible into shares of Common
          Stock
          at $ .0001 per share.  The Warrants are convertible any time after the
          date of issue.
 
 On
          August
          6, 2007, the Company filed Form S-8 and registered 8,500,000 shares of
          Common
          Stock at a proposed maximum offering price of $ .013 per share, issuable
          pursuant to the Company's 2007 Compensation Plan, dated August 6,
          2007.
 
  F-22
 **Item
        8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
        DISCLOSURE**
  Not
        applicable.
  **Item
        8A. CONTROLS AND PROCEDURES**
  (a)
        Evaluation of Disclosure Controls and Procedures: As of the end of the period
        covered by this report, we conducted an evaluation, under the supervision
        and
        with the participation of our chief executive officer and chief financial
        officer, of our disclosure controls and procedures (as defined in Rule 13a-15(e)
        and Rule 15d-15(e) of the Exchange Act). Based upon this evaluation, our
        chief
        executive officer and chief financial officer concluded that the our disclosure
        controls and procedures are effective to ensure that information required
        to be
        disclosed by us in the reports that we file or submit under the Exchange
        Act is
        recorded, processed, summarized and reported, within the time periods specified
        in the Commission's rules and forms. There was no significant change in our
        internal controls or in other factors that could significantly affect these
        controls subsequent to the date of the evaluation.
  (b)
        Limitations on Effectiveness of Disclosure Controls and Procedures:
  Disclosure
        controls and procedures cannot provide absolute assurance of achieving financial
        reporting objectives because of their inherent limitations. Disclosure controls
        and procedures is a process that involves human diligence and compliance
        and is
        subject to lapses in judgment and breakdowns resulting from human failures.
        Disclosure controls and procedures also can be circumvented by collusion
        or
        improper management override. Because of such limitations, there is a risk
        that
        material misstatements may not be prevented or detected on a timely basis
        by
        disclosure controls and procedures. However, these inherent limitations are
        known features of the financial reporting process. Therefore, it is possible
        to
        design into the process safeguards to reduce, though not eliminate, this
        risk.
  **PART
        III**
  **Item
        9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
        WITH
        SECTION 16(a) OF THE EXCHANGE ACT**
  **Directors
        and Executive Officers**
  The
        following table sets forth current information regarding our executive officers
        and directors:
  Name
              
              Position
              
              Position
                Held SinceJohn
                Antonio
              
              President,
                Chief Executive Officer, Director
              
              June   2005Ken
                McCoppen
              
              Senior
                Vice President, Director
              
              June   2005Howard
                Bielski
              
              Chief
                Financial Officer
              
              August
                2005Dr.
                Michael Shen
              
              Director
              
              July   2005Dr.
                McKinley Boston
              
              Director
              
              July   2005
  For
        directors, the term of office is until the next annual meeting of shareholders.
        For officers, the term of office is until the next annual meeting of the
        Board
        of Directors, presently scheduled to be held immediately following the annual
        meeting of the shareholders.
  John
        Antonio, President, Chief Executive Officer and Director. John Antonio has
        served as our President, Chief Executive Officer, and a Director since June
        2005. From March of 2004 until present, Mr. Antonio has been involved in
        the
        establishment of Trillennium Medical Imaging, Inc. and its merger with Wellstar
        International, Inc. From January 2003 until present, Mr. Antonio has been
        the
        Vice President of Have Network Technologies International, Inc. From 1996
        to
        present Mr. Antonio has been the manager of Intertel LLC, which is engaged
        in
        the distribution of prepaid phone cards in Mexico. Mr. Antonio graduated
        from
        Bowling Green State University with a BLS Degree.
  23
  Ken
        McCoppen, Senior Vice President and Director. Ken McCoppen has served as
        our
        Senior Vice President and a Director since June 2005. From September 2002
        until
        September 2004, Mr. McCoppen was Executive Vice President of Sales for Arista
        Communications, a provider of telecommunications services. From June 1999
        until
        September 2002, Mr. McCoppen was Vice President of the National Partners
        Program
        for Qwest Communications. From 1982 to 1999, Mr. McCoppen held sales positions
        at the following companies: Toshiba America; Samsung America; Micronics;
        Mantech
        International; and GTE.
  Howard
        Bielski, Chief Financial Officer. Mr. Bielski has served as our Chief Financial
        Officer since August 2005. Mr. Bielski is the managing member of Bielski
&
Bielski, LLC, an accounting firm located in Fairfield, New Jersey and is
        a
        member of the American Institute of Certified Public Accountants and the
        New
        Jersey Society of Certified Public Accountants.
  Dr.
        Michael Y. H. Shen, Director. Dr. Shen has served as a Director since July
        2005.
        Since October 2004, Dr. Shen has been the Head of the Section of Cardiac
        Imaging
        and a Staff Physician at the Cleveland Clinic Florida. Since June 2003, Dr.
        Shen
        has been the Head of the Section of Nuclear Cardiology and a Staff Physician
        at
        the Cleveland Clinic Florida. From July 1999-May 2003, Dr. Shen held the
        following positions at the Cooper Hospital/University Medical
        Center:
  Director,
        Nuclear Cardiology and Director, Center for Cardiovascular Informatics. Also
        from July 1999-May 2003, Dr. Shen was an Assistant Professor of Medecine
        at the
        UMDNJ Robert Wood Johnson Medical School South Campus.
  Dr.
        McKinley Boston, Director. Dr. Boston has served as a Director since July
        2005.
        Since December 2004, Dr. Boston has served as Athletic Director and Vice
        President of New Mexico State University. Since September 2000, Dr. Boston
        has
        served as an Education Consultant at the Consortium of Minneapolis Board
        of
        Education, Minneapolis Youth Coordinating Board, and Minneapolis Park
        Board.
  **Audit
        Committee**
  At
        present we do not have an audit committee and consequently the entire Board
        serves as the audit committee. The Board presently consists of 4 members,
        two of
        whom are independent. We have interviewed several qualified individuals for
        the
        position of Audit Committee Financial Expert on the Board of Directors. All
        have
        declined to serve, with the primary reason being personal liability issues,
        especially the perceived view that being the "financial expert" increases
        the
        individual's personal exposure over that of being a regular Board
        member.
  **Code
        of Ethics**
  The
        Board
        of Directors has not adopted a Code of Business Conduct and Ethics that is
        applicable to our directors, principal executive and financial officer,
        principal accounting officer or controller, and persons performing similar
        functions.
  **Compliance
        with Section 16(a) of the Exchange Act**
  Section
        16(a) of the Securities Exchange Act of 1934, as amended (the "1934 Act")
        requires officers and directors of a company with securities registered pursuant
        to Section 12 of the 1934 Act, and persons who own more than 10% of the
        registered class of such company's equity securities, to file reports of
        ownership and changes in ownership with the Securities and Exchange Commission
        (the "SEC"). Officers, directors and greater than 10% stockholders are required
        by SEC regulation to furnish the subject company with copies of all Section
        16(a) forms filed. During our fiscal year ended July 31, 2006, "), our officers,
        directors and greater than 10% stockholders were not subject to the filing
        requirements of Section 16(a) of the 1934 Act.
   24
  **Item
        10. Executive Compensation**
  The
        following table sets forth the cash compensation (including cash bonuses)
        paid
        or accrued by us for our years ended July 31, 2007, 2006 and 2005 to (i)
        our
        Chief Executive Officer and (ii) our four most highly compensated officers,
        other than our Chief Executive Officer, whose total annual salary and bonus
        exceeded $100,000.
  Summary
        Compensation Table
  Annual
                    Long-term
                
                
                Compensation
                
                
                CompensationAwards
                
                
                PayoutsName
                  and Principal Position
                Fiscal
                    Year
                
                Salary
                  ($)
                
                
                Bonus
                  ($)
                
                
                Securities
                  Underlying
                  Options/SARs
                    (#)
                
                
                LTIP
                  Payouts
                  ($)
                
                
                All
                    Other Compensation
                  ($)John
                  Antonio
                2007
                
                $
                240,000
                
                
                $
                --
                
                
                
                --
                
                
                
                --
                
                
                
                --President
                  & CEO
                2006
                
                
                240,000
                
                
                
                61,133
                
                
                
                --
                
                
                
                --
                
                
                
                --2005
                
                
                --
                
                
                
                --
                
                
                
                --
                
                
                
                --
                
                
                
                --Ken
                  McCoppen
                2007
                
                $
                240,000
                
                
                $
                --
                
                
                
                --
                
                
                
                --
                
                
                
                --Vice
                  President &Secretary
                2006
                
                
                240,000
                
                
                
                74550
                
                
                
                --
                
                
                
                --
                
                
                
                --2005
                
                
                --
                
                
                
                --
                
                
                
                --
                
                
                
                --
                
                
                
                --
 **Options
        Grants in Last Fiscal Year**
  None.
  **Aggregate
        Option Exercises In Last Fiscal Year and Fiscal Year End Option
        Values**
  None.
  **Employment
        Agreements**
  As
        previously disclosed on, August 5, 2005, we entered into separate
        employment agreements with John A. Antonio, our President and CEO; and Kenneth
        B. McCoppen, our Vice President and Corporate Secretary. These agreements
        provide for base annual salaries of $240,000. Further, each agreement has
        a base
        term of five (5) years.
  25
   **Item
        11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
        MANAGEMENT**
  The
        following table indicates beneficial ownership of our common stock as of
        October
        25, 2007 by each person or entity known by us to beneficially own more than
        5%
        of the outstanding shares of our common stock; each of our executive officers
        and directors; and all of our executive officers and directors as a group.
  Name
                  andAddress
                  ofBeneficial
                  Owner (1)(2)
              
              Common
                  Shares
                Beneficially
                Owned
                  (1)
              
              
              Total
              
              
              Percent
                of
                Class
                (3)John
                A. Antonio (4)
              
              
              11,700,000
              
              
              
              11,700,000
              
              
              
              9.3
              %Howard
                Bielski
              
              
              3,000,000
              
              
              
              3,000,000
              
              
              
              2.4
              %McKinley
                Boston
              
              
              500,000
              
              
              
              500,000
              
              
              
              *Ken
                McCoppen
              
              
              10,605,000
              
              
              
              10,605,000
              
              
              
              8.4
              %Michael
                Shen
              
              
              4,000,000
              
              
              
              4,000,000
              
              
              
              3.2
              %Andrew
                M. Thompson (5)
              
              
              58,885,000
              
              
              
              58,885,000
              
              
              
              46.7
              %Cede
                & Co.
              
              
              45,226,117
              
              
              
              45,226,117
              
              
              
              35.8
              %
  All
        directors and Executive 29,805,000 23.6%
  *Less
        than 1%
  (1)
              Beneficial
                  Ownership is determined in accordance with the rules of the Securities
                  and
                  Exchange Commission and generally includes voting or investment
                  power with
                  respect to securities. Shares of common stock subject to options
                  or
                  warrants currently exercisable or convertible, or exercisable or
                  convertible within 60 days of June 19, 2007 are deemed outstanding
                  for
                  computing the percentage of the person holding such option or warrant
                  but
                  are not deemed outstanding for computing the percentage of any
                  other
                  person.
  (2)
              Unless
                  otherwise indicated, the address of each beneficial owner is c/o
                  Wellstar
                  International, Inc., 6911 Pilliod Road, Holland, Ohio
                  43528.
  (3)
              Based
                  on 126,166,117 shares issued and outstanding as of October 25,
                  2007.
  (4)
              Includes
                  (i) 7,700,000 shares of common stock owned by Mr. Antonio and (ii)
                  4,000,000 shares of common stock held by Mr. Antonio's
                  wife.
  (5)
              Includes
                  (i) 56,485,000 shares of common stock underlying a $400,000 Secured
                  Convertible Note (ii) 1,000,000 shares of common stock and (iii)
                  1,400,000
                  shares of common stock underlying
                  warrants.
  26
   **Item
        12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS**
  None
        of
        the following parties has, during the last two years, had any material interest,
        direct or indirect, in any transaction with Wellstar International, Inc.
        or in
        any presently proposed transaction that has or will materially affect Wellstar
        International, Inc.:
  -
        Any of
        our directors or officers;
 -
        Any
        person proposed as a nominee for election as a director;
 -
        Any
        person who beneficially owns, directly or indirectly, shares carrying more
        than
        5% of any class of our voting securities;
 -
        Any of
        our promoters;
 -
        Any
        relative or spouse of any of the foregoing persons who has the same house
        as
        such person.
  **Item
        13. EXHIBITS**
  (a)
        Exhibits
  **Exhibit**
  3.1
              Articles
                  of Incorporation of Wellstar International, Inc.
                  **
  3.2
              Certificate
                of Amendment to Articles of Incorporation of Wellstar International,
                Inc.*****
  3.3
              Bylaws
                of Wellstar International, Inc. **
  10.1
              Securities
                Purchase Agreement dated October 31, 2005, by and among Wellstar
                International Inc. and the investors named on the signature pages
                thereto.
                ****
  10.2
              Form
                of Callable Secured Convertible Note dated October 31, 2005.
                **
  10.3
              Form
                of Stock Purchase Warrant dated October 31, 2005.
                **
  10.4
              Registration
                Rights Agreement dated October 31, 2005, by and among Wellstar
                International Inc. and the investors named on the signature pages
                thereto.
                **
  10.5
              Security
                Agreement dated October 31, 2005, by and among Wellstar International
                Inc.
                and the investors named on the signature pages thereto.
                **
  10.6
              Intellectual
                Property Security Agreement dated October 31, 2005, by and among
                Wellstar
                International Inc. and the investors named on the signature pages
                thereto.
                **
  10.7
              Technical
                Services Agreement by and between Trillennium Medical Imaging, Inc.
                and
                Surgicenters of America, Inc. dated October 4,
                2005.**
  10.9
              Term
                Loan Agreement dated October 11, 2005. **
  10.10
              Commercial
                Cognovit Promissory Note dated October 17, 2005.
                **
  27
  10.11
              Commercial
                  Cognovit Promissory Note dated November 28, 2005.
                  **
  10.12
              Security
                  Agreement dated October 11, 2005.
                  **
  10.13
              Demand
                  Note dated August 1, 2005. **
  10.14
              Employment
                  Agreement by and between Wellstar International, Inc. and John
                  A. Antonio
                  * *
  10.15
              Employment
                  Agreement by and between Wellstar International, Inc. and Ken
                  McCoppen**
  10.16
              Definitive
                  Agreement dated December 12, 2005, by and among Wellstar International,
                  Inc., Micro Health Systems, Robert Barnes and Terri
                  Cmorey.***
  10.17
              Marketing
                  Agreement between Trillennium Medical Imaging, Inc., and Allevia
                  Medical.*
  10.18
              Addendum
                  to Commercial Cognovit Promissory Note between Wellstar International,
                  Inc., Trillennium Medical Imaging, Inc., and Andrew M.
                  Thompson.*
  10.19
              Second
                  Addendum to Commercial Cognovit Promissory Note between Wellstar
                  International, Inc., Trillennium Medical Imaging, Inc., and Andrew
                  M.
                  Thompson. ******
 
 10.20
              Securities  Purchase  Agreement,  dated  November
                  30, 2006, by and among Wellstar  International,  Inc.
                  and
                  AJW  Offshore,  Ltd.,  AJW  Qualified
                  Partners, LLC, AJW Partners, LLC and New Millennium Capital Partners
                  II,
                  LLC.
 
 10.21
              Form
                  of Callable Secured Convertible
                  Note.*******
 
 10.22
              Form
                  of Stock Purchase Warrant.*******
 
 10.23
              Registration
                  Rights Agreement by and among Wellstar International Inc. and the
                  secured
                  parties signatory thereto.*******
 
 10.24
              Security
                  Agreement by and among Wellstar International Inc. and the secured
                  parties
                  signatory thereto. *******
 
 10.25
              Intellectual
                  Property Security Agreement by and among Wellstar International
                  Inc. and
                  the secured parties signatory thereto.
                  *******
 
 10.26
              Limited
                  Technology License Agreement by and between Trillennium Medical
                  Imaging,
                  Inc. and Maclath Ltda
  31.1
              Certification
                  of Chief Executive Officer pursuant to Rule 13a-14 and Rule 15d-14(a),
                  promulgated under the Securities and Exchange Act of 1934, as amended.
                  *
  31.2
              Certification
                  of Chief Financial Officer pursuant to Rule 13a-14 and Rule 15d-14(a),
                  promulgated under the Securities and Exchange Act of 1934, as amended.
                  *
  32.1
              Certification
                  pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
                  906 of
                  the Sarbanes-Oxley Act of 2002 (Chief Executive Officer).
                  *
  32.2
              Certification
                  pursuant to 18 U.S.C. Section 1350, as adopted pursuant toSection
                  906 of the Sarbanes-Oxley Act of 2002 (Chief Financial
                  Officer).*
  *
        Filed
        herewith.
  **
        Incorporated by reference to Form SB-2 filed with the Commission on December
        13,
        2005.
  ***
        Incorporated by reference to Form SB-2/A filed with the Commission on February
        1, 2006.
  ****
        Incorporated by reference to Form SB-2/A filed with the Commission on April
        4,
        2006.
  *****
        Incorporated by reference to Form SB-2/A filed with the Commission on June
        20,
        2006.
  ******
        Incorporated by reference to Form 8-K filed with the Commission on November
        24,
        2006
  *******
        Incorporated by reference to Form 8-K filed with the Commission on December
        6,
        2006
  *******
        Incorporated by reference to Form 8-K filed with the Commission on July 12,
        2007
  28
  **Item
        14. Principal Accounting Fees and Services**
  Audit
        fees
  The
        aggregate fees billed for professional services rendered by our independent
        auditors for the audit of our financial statements, for the reviews of the
        financial statements included in our annual report on Form 10KSB, and for
        other
        services normally provided in connection with statutory filings were $40,542
        and
        $22,849 for the years ended July 31, 2007 and July 31, 2006,
        respectively.
  **Audit-Related
        Fees**
  No
        audit-related fees were incurred for the years ended July 31, 2007 and July
        31,
        2006.
  **Tax
        Fees**
  No
        tax
        fees were incurred for the years ended July 31, 2007 and July 31,
        2006.
  **All
        Other Fees**
  We
        did
        not incur any fees for other professional services rendered by our independent
        auditors during the years ended July 31, 2007 and July 31, 2006.
  29
  **SIGNATURES**
  In
        accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934,
        the
        registrant has duly caused this report to be signed on its behalf by the
        undersigned, thereunto duly authorized.
  **WELLSTAR
                INTERNATIONAL, INC.**Dated:   November
                  13, 2007
              By:
              /s/ John
                AntonioJohn
                AntonioPresident
                and Chief Executive
                Officer(Principal
                Executive
                Officer)
  Dated:   November
                  13, 2007
              By:
              /s/ Howard
                BielskiHoward
                BielskiChief
                Financial Officer(Principal
                Financial and Accounting Officer)
  PURSUANT
        TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS REPORT HAS
        BEEN
        SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE DATES
        INDICATED:
  Signature
              
              Title
              
              Date/s/
                  John
                  Antonio
              
              President
                  and
                  Chief Executive Officer, Director
              
              November
                  13,
                  2007John
                  Antonio
              
              (Principal
                Executive
                Officer)/s/
                  Ken
                  McCoppen
              
              Senior
                  Vice
                  President, Director
              
              November
                  13,
                  2007Ken
                  McCoppen/s/
              
              DirectorMichael
                  Shen/s/
                McKinley Boston
              
              Director
              
              November
                13, 2007McKinley
                Boston
  30