10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

ü QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended:  March 31, 2008

r TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

For the transition period from to

Commission file number:0-12968

InMedica Development Corporation

(Exact name of small business issuer as specified in its charter)

UTAH	87-0397815
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)

825 North 300 West, Suite N132

Salt Lake City, Utah 84103

(Address of principal executive offices)

(801) 521-9300

(Issuer’s telephone number)

Check whether the issuer (1) 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 üNo r

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer                                    Accelerated filer

Non-accelerated filer                                   ü Smaller reporting company

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).Yes rNo ü

State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date:18,629,493 shares of $.001 par value common stock as of May 12, 2008

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PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements

INMEDICA DEVELOPMENT CORPORATION AND SUBSIDIARY

CONSOLIDATED BALANCE SHEET

	As of
	March 31,
	2008
	(Unaudited)
ASSETS
CURRENT ASSETS:
Cash & cash equivalents	$	11,969
Prepaid expenses and other		200
Total current assets		12,169
EQUIPMENT AND FURNITURE,
at cost, less accumulated depreciation of $254,947		274
Total assets	$	12,443
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Related party consulting fees payable	$	84,000
Accounts payable		21,232
Note payable		225,033
Accrued payroll		12,000
Accrued interest		20,362
Related party royalty payable		83,333
Preferred stock dividend payable		51,069
Total current liabilities		497,029
MINORITY INTEREST		(217,169	)
STOCKHOLDERS' EQUITY:
Preferred stock, 10,000,000 shares authorized;
Series A preferred stock, cumulative and
convertible, $4.50 par value, 1,000,000 shares
designated, 21,016 shares issued and outstanding		94,573
Common stock, $.001 par value; 40,000,000
shares authorized, 18,629,493 issued and outstanding		18,629
Additional paid-in capital		8,426,839
Accumulated deficit		(8,807,458	)
Total stockholders equity		(267,417	)
Total liabilities and stockholders' equity	$	12,443

See notes to consolidated financial statements

2

INMEDICA DEVELOPMENT CORPORATION AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF OPERATIONS

	For the Three
	Months Ended
	March 31,
	2008			2007
	(Unaudited)
TOTAL ROYALTY REVENUES	$	-0-			-0-
OPERATING EXPENSES:
General and administrative		58,973			52,887
Research and development		-0-			-0-
Total operating expenses		58,973			52,887
LOSS FROM OPERATIONS		(58,973	)		(52,887	)
OTHER (EXPENSE) INCOME
Other (expense) income, net		(3,867	)		(2,714	)
Total other (expense) income		(3,867	)		(2,714	)
LOSS BEFORE MINORITY INTEREST		(62,840	)		(55,601	)
MINORITY INTEREST		24,558			23,848
NET LOSS		(38,282	)		(31,753	)
PREFERRED STOCK DIVIDENDS		(1,892	)		(1,892	)
NET LOSS APPLICABLE TO COMMON STOCKHOLDERS	$	(40,174	)	$	(34,645	)
NET LOSS PER COMMON SHARE (BASIC AND DILUTED)	$	(.00	)	$	(.00	)
Weighted average number of common shares outstanding		18,629,493			18,629,493

See notes to consolidated financial statements.

3

INMEDICA DEVELOPMENT CORPORATION AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

	For the Three
	Months Ended
	March 31,
	2008			2007
	(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(38,282	)	$	( 31,753	)
Adjustments to reconcile net loss to net cash used in operating activities-
Depreciation and amortization		91			123
Minority interest in losses		(24,558	)		(23,848	)
Change in assets and liabilities
Account receivable		-0-			(200	)
Consulting fee payable to related party		6,000			6,000
Royalty payable to Related party		10,000			10,000
Accounts payable		15,730			-0-
Accrued interest payable		3,866			2,713
Accrued payroll and related taxes		12,000			-0-
Net cash used in operating activities		(15,153	)		(36,965	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from note receivable		-0-			-0-
Net cash provided by investing activities		-0-			-0-
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from notes payable		24,416			21,998
Payments on notes payable		-0-			-0-
Net cash provided by financing activities		24,416			21,998
NET INCREASE (DECREASE) IN CASH		9,263			(14,967	)
CASH AT BEGINNING OF PERIOD		2,706			34,079
CASH AT END OF PERIOD	$	11,969		$	19,112

See notes to consolidated financial statements.

4

INMEDICA DEVELOPMENT CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1.           Basis of Presentation

The accompanying unaudited consolidated financials statements of InMedica Development Corporation and its majority owned subsidiary, MicroCor, Inc. (collectively the Company) have been prepared on a going concern basis which contemplates the realization of assets and satisfaction of liabilities that might be necessary should the Company be unable to continue as a going concern.  The Company generated a net loss of $38,282 and $31,753 for the three month periods ended March 31, 2008 and 2007, respectively, and negative cash flows from operations of $15,153 and $36,965 for the three month periods ended March 31, 2008 and 2007, respectively.  As of March 31, 2008, the Company had an accumulated deficit of $8,807,458.  At March 31, 2008, the Company had a stockholder’s deficit of $267,417.  These conditions raise substantial doubt as to the Company’s ability to continue as a going concern.  The Company’s continued existence is dependent upon its ability to execute its operating plan and to obtain additional debt or equity financing.  There can be no assurance that the necessary debt or equity financing will be available, or will be available on terms acceptable to the Company.  Management’s operating plan includes working with Wescor to complete research, development and, if warranted, marketing of its hematocrit technology and/or pursuing other strategic alliances and licensing agreements such as the current Agreement  with Wescor, Inc.  See Item 2 – “Management’s Discussion and Analysis.”

The accompanying consolidated financial statements of the Company are unaudited. However, in management’s opinion, all adjustments, consisting only of normal recurring adjustments necessary for fair presentation of results for the interim periods shown, have been made. Results for interim periods are not necessarily indicative of those to be expected for the full year.   These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes to consolidated financial statements included in the Company’s annual report on form 10-K for the year ended December 31, 2007.

2.           Summary of Significant Accounting Policies

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

Use of Estimates – The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.   Actual results could differ from those estimates.

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Item 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND PLAN OF OPERATION

Overview.  Since 1989, the Company has engaged in research and development  of a device  to  measure  hematocrit  non-invasively (the  "Non-Invasive  Hematocrit Technology" and/or the "Technology") and fund raising to finance the payment of research, development and administrative expenses.  Hematocrit is the percentage of red blood cells in a given volume of human blood.  Research, development and administrative expenses of the Company relating to the Technology were funded during the 1990’s by borrowing and by royalty revenues from the sale of a portable ECG monitor which incorporated Company technology.   The monitor was marketed by Critikon, Inc., then a Johnson and Johnson subsidiary.   However Critikon discontinued the monitor in 2001 and InMedica has not since had revenues from operations.  During 2001 the Company and its subsidiary, MicroCor, Inc. sold restricted common stock to Chi Lin Technologies, Ltd. of the Republic of China (Taiwan) for $1,000,000 and used the funds to continue funding of research, development and administrative expenses.   Chi Lin also signed a development agreement under which it performed or financed the Company’s primary research and development effort conducted initially in Taiwan and later in the United States. When remaining funds from the stock sale were expended during 2003, the Company began searching for additional funding and/or a partner to conduct additional research and development. The Company’s officers and Chairman also agreed to the accrual of their wages and consulting fees pending receipt of funds to pay those obligations.  In January 2005, the shareholders of the Company approved an Agreement with Wescor which provided additional funding for administrative expenses and provides for research and development of the Hematocrit Technology by Wescor.

Plan of Operation.  Wescor recently advised the Company and Chi Lin that its parent corporation is interested in shifting Wescor’s resources presently dedicated to the research and development of the Hematocrit Technology to other projects.  As a result, Wescor may be interested in bringing on a new partner to conduct research and development or perhaps in selling its interest in the Technology, although Wescor continues to fund research and development at this time under the terms of the Joint Development Agreement.  The Company is presently discussing the matter with Wescor.   No present plans or commitments for other alternatives have been made.  During 2007, the Company funded administrative operations with the proceeds of minimum royalty payments from MicroCor.Wescor has loaned MicroCor sufficient funds to enable MicroCor to pay one half of the minimum royalty.  Payment of the balance of the minimum royalty was deferred by the Company.  The Company has in the past borrowed from affiliates, however, such borrowing is not expected to be available in the future to meet obligations or to fund research and development. In past years, salaries of employees and consulting fees have been accrued and later settled by the issuance of restricted stock and the officers of the Company are presently deferring all or part of their compensation. InMedica will look for other funding sources or opportunities, as to which it presently has no commitments.

6

Liquidity and Capital Resources.

The minimum royalty payments in the first quarter of 2008 and 2007, provided minimum operating capital to the Company.  However, the Company is currently in discussions with Wescor regarding Wescor’s continued participation in the Joint Development Agreement.  Effective January, 2008, the Company’s CEO and CFO are each deferring payment of $2,000 per month in salary .

During the years 2007 and 2006, liquidity was generated by borrowings from Wescor and from the payment of minimum royalties to InMedica by MicroCor.   The Company may need to engage in fund raising during 2008 in order to meet future cash needs.

Results of Operations.   

The Company had an accumulated deficit of $8,807,458 as of March 31, 2008. ..  No revenues from operations were received in the quarters ended March 31, 2008 and March 31, 2007.      The Company had a net loss from operations of $38,282 and $31,753 for the quarters ended March 31, 2008 and March 31, 2007, as the Company used limited revenues for essential expenses.

Item 3:   CONTROLS AND PROCEDURES

The Company's Chief Executive Officer and Chief Financial Officer have concluded, based on an evaluation required by paragraph (b) of Section 240.13a-15 or 240.15d-15 of the Rules of the Securities Exchange Act of 1934, conducted as of the end of the period covered by this Quarterly Report on Form 10-QSB, that the Company's disclosure controls and procedures (as defined in Exchange Act Rules 13a – 15e or 240.15d-15(e)) have functioned effectively.   For purposes of this Item, the term disclosure controls and procedures means controls and other procedures of the Company that are designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act (15 U.S.C. 78a et seq.) is recorded, processed, summarized and reported, within the time periods specified in the Commission's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Act is accumulated and communicated to the issuer's management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

There have been no changes in the Company’s internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Section 240.13a-15 or 240.15d-15 of the Rules of the Securities Exchange Act of 1934, that occurred during the Company’s last fiscal quarter (the Company’s fourth fiscal quarter in the case of an annual report) that have materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II - OTHER INFORMATION

Item 1.     Legal Proceedings:  None

Item 1A. Risk Factors.  Material changes from risk factors as previously disclosed in the registrant's Form 10-K:  None

Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds:   None during the period covered by this report.

Item 3.    Defaults Upon Senior Securities:  None

Item 4.    Submission of Matters to a Vote of Security Holders:  None

Item 5.    Other Information:  None

Item 6.    Exhibits:

(31.1)                      Sarbanes-Oxley Section 302 Certification – Ralph Henson

(31.2)                      Sarbanes- Oxley Section 302 Certification- Richard Bruggeman

(32.1)                      Sarbanes-Oxley Section 906 Certification

Reports on Form 8-K: None

8

SIGNATURES

In accordance with the requirements of the Exchange Act, the registr­ant caused this report to be signed on its behalf by the undersigned, thereun­to duly authorized.

INMEDICA DEVELOPMENT CORPORATION

/s/ Ralph Henson

By Ralph Henson, President

/s/ Richard Bruggeman

By Richard Bruggeman, Treasurer

Date:  May 12, 2008

9

EXHIBIT INDEX - INMEDICA DEVELOPMENT CORPORATION

FORM 10Q – MARCH 31, 2008

EXHIBIT NUMBER	DESCRIPTION
31.1	Section 302 Certifications of Ralph Henson
31.2	Section 302 Certifications of Richard Bruggeman
32.2	Sarbanes-Oxley Section 906 Certification

EX-31.1

Exhibit 31.1

CERTIFICATION PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

I, Ralph Henson, certify that:

1. I have reviewed this quarterly report on Form 10-Q of InMedica Development Corporation.

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report.

3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report.

4. The small business issuer’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))for the small business issuer and have:

a)  Designed such disclosure controls and procedures or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)  Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)  Evaluated the effectiveness of the small business issuer’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)  Disclosed in this report any change in the small business issuer’s internal control over financial reporting that occurred during the small business issuer’s most recent fiscal quarter (the small business issuer’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer’s internal control over the financial reporting; and

5. The small business issuer’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting to the small business issuer’s auditors and the audit committee of the small business issuer’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer’s internal control over financial reporting.

Date:  May 12, 2008

/s/ Ralph Henson

Ralph Henson,

President

EX-31.2

Exhibit 31.2

CERTIFICATE PURSUANT TO SECTION 302

OF THE SABANES-OXLEY ACT OF 2002

I, Richard Bruggeman, certify that:

1. I have reviewed this quarterly report on Form 10-Q of InMedica Development Corporation.

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report.

3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report.

4. The small business issuer’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))for the small business issuer and have:

a)  Designed such disclosure controls and procedures or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)  Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)  Evaluated the effectiveness of the small business issuer’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)  Disclosed in this report any change in the small business issuer’s internal control over financial reporting that occurred during the small business issuer’s most recent fiscal quarter (the small business issuer’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer’s internal control over the financial reporting; and

5. The small business issuer’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting to the small business issuer’s auditors and the audit committee of the small business issuer’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer’s internal control over financial reporting.

Date:  May 12, 2008

/s/ Richard Bruggeman

Richard Bruggeman,

Chief Financial Officer

EX-32

Exhibit 32.1 CERTIFICATE PURSUANT TO

18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Each of the undersigned hereby certifies in his capacity as an officer of InMedica Development Corporation (the Company) that the Quarterly Report of the Company on Form 10Q for the quarter ended September 30, 2007 fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 and that the information contained in such report fairly presents, in all material respects, the financial condition of the Company at the end of such periods and the results of operations of the Company for such periods.

/s/ Ralph Henson

Ralph Henson,

Chief Executive Officer

May 12, 2008

/s/ Richard Bruggeman

Richard Bruggeman,

Chief Financial Officer

May 12, 2008