form10q093008.htm

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: September 30, 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 ü No 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 r No 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 September 30, 2008.

INMEDICA DEVELOPMENT CORPORATION AND SUBSIDIARY

CONSOLIDATED BALANCE SHEET

ASSETS
	As of		As of
	September 30,		December 31,
	2008		2007
	(Unaudited)		(audited)
CURRENT ASSETS:
Cash & cash equivalents	$	3,532	$	2,706
Prepaid expenses and other		200		200
Total current assets		3,732		2,906

EQUIPMENT AND FURNITURE,
at cost, less accumulated depreciation of $255,130 and $254,856 respectively		91		365
Total assets	$	3,823	$	3,271

See notes to consolidated financial statements

INMEDICA DEVELOPMENT CORPORATION AND SUBSIDIARY

CONSOLIDATED BALANCE SHEET (Continued)

LIABILITIES AND STOCKHOLDERS' EQUITY

	As of			As of
	September 30,			December 31,
	2008			2007
	(Unaudited)			(Unaudited)
CURRENT LIABILITIES:
Related party
Consulting fees payable	$	96,000			78,000
Accounts payable		25,381			5,503
Accrued payroll		36,000			-
Accrued interest		29,656			16,495
Related party royalty payable		103,333			73,333
Preferred stock dividend payable		54,852			49,177
Related party loan payable		18,000			-
Current portion of long term debt		92,633			60,617
Total current liabilities		455,855			283,125

LONG TERM LIABILITIES
Long term convertible promissory note		140,000			140,000

TOTAL LIABILITIES		595,855			423,125

MINORITY INTEREST		(267,502	)		(192,611	)

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			94,573
Common stock, $.001 par value; 40,000,000 shares authorized, 18,629,493 issued and outstanding		18,629			18,629
Additional paid-in capital		8,426,839			8,426,839
Accumulated deficit		(8,864,571	)		(8,767,284	)
Total stockholder’s equity		(324,530	)		(227,243	)

Total liabilities and stockholders' equity	$	3,823		$	3,271

See notes to consolidated financial statements

INMEDICA DEVELOPMENT CORPORATION AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF OPERATIONS

	For the Three						For the Nine
	Months Ended						Months Ended
	September 30,						September 30,
	2008			2007			2008			2007
	(Unaudited)						(Unaudited)

TOTAL ROYALTY REVENUES	$	-		$	-		$	-		$	-

OPERATING EXPENSES:
General and administrative		42,040			61,183			153,343			148,551
Research and development		-			1,009			-			1,009
Total operating expenses		42,040			62,192			153,343			149,560

LOSS FROM OPERATIONS		(42,040	)		(62,192	)		(153,343	)		(149,560	)

OTHER EXPENSE:
other expense, net		(4,647	)		(3,237	)		(13,161	)		(9,110	)
Total other expense, net		(4,647	)		(3,237	)		(13,161	)		(9,110	)

LOSS BEFORE MINORITY INTEREST		(46,687	)		(65,429	)		(166,504	)		(158,670	)

MINORITY INTEREST		23,857			24,759			74,891			73,680

NET LOSS		(22,830	)		(40,670	)		(91,613	)		(84,990	)

PREFERRED STOCK DIVIDENDS		(1,891	)		(1,891	)		(5,674	)		(5,674	)

NET LOSS APPLICABLE TO COMMON STOCKHOLDERS		(24,721	)		(42,561	)		(97,287	)		(90,664	)

NET LOSS PER COMMON SHARE
(BASIC AND DILUTED)	$	-			-		$	-		$	-

Weighed average number of common shares outstanding		18,629,493			18,629,493			18,629,493			18,629,493

See notes to consolidated financial statements.

INMEDICA DEVELOPMENT CORPORATION AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

	For the Nine
	Months Ended
	September 30,
	2008			2007
	(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(91,613	)	$	( 84,990	)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation and amortization		274			370
Minority interest in losses		(74,891	)		(73,680	)
Change in assets and liabilities
Account receivable		-			(90	)
Consulting fee payable to related party		18,000			18,000
Royalty payable to Related party		30,000			30,000
Accounts payable		19,878			2,538
Accrued interest payable		13,161			9,110
Accrued payroll and related taxes		36,000			-
Net cash used in operating activities		(49,191	)		(98,742	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from note receivable		-			-
Net cash provided by investing activities		-			-

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from notes payable		32,017			70,497
Proceeds from related party loan		18,000			-
Net cash provided by financing activities		50,017			70,497

See notes to consolidated financial statements.

INMEDICA DEVELOPMENT CORPORATION AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

	For the Nine
	Months Ended
	September 30,
	2008		2007
	(Unaudited)

NET INCREASE (DECREASE) IN CASH		826		(28,245	)

CASH AT BEGINNING OF PERIOD		2,706		34,079

CASH AT END OF PERIOD	$	3,532	$	5,834

See notes to consolidated statements

INMEDICA DEVELOPMENT CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Item 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 $91,613 and $84,990 for the nine month periods ended September 30, 2008 and 2007, respectively, and negative cash flows from operations of $49,191 and $98,742 for the nine month periods ended September 30, 2008 and 2007, respectively. As of September 30, 2008, the Company had an accumulated deficit of $8,864,571. At September 30, 2008, the Company had a stockholder’s deficit of $324,530. 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 to complete research, development and, if warranted, marketing of its hematocrit technology and/or pursuing strategic alliances and licensing agreements. 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.

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. 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.

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 $8,864,571 as of September 30, 2008. No revenues from operations were received in the quarters ended September 30, 2008 and September 30, 2007. The Company had a net loss from operations of $153,343 and $149,560 for the quarters ended September 30, 2008 and September 30, 2007. The increase in net loss resulted primarily from an increase in professional fees.

Item 4T: CONTROLS AND PROCEDURES

The Company’s Chief Executive Officer and the Principal Financial Officer, evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended) as of June 30, 2008. Based on this evaluation, the Chief Executive Officer and Principal Financial Officer concluded that, as of September 30, 2008, the Company’s disclosure controls and procedures were effective.

There were no changes in the Company’s internal controls over financial reporting that occurred during the quarter ended September 30, 2008, that have materially affected, or are reasonably likely to materially affect, the Company’s internal controls over financial reporting.

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: Effective September 10, 2008, Chi Lin Technology Co., Ltd. (“Chi Lin”), an entity of the Republic of China granted an option to purchase all of its stock ownership in InMedica (6,043,704 common shares being 32.4% of the issued and outstanding stock of InMedica) and all of its stock ownership in MicroCor, Inc. (425,000 common shares) to Synergistic Equities Ltd., a Bahamas entity (“Synergistic Equities”) for the aggregate sum of $107,000 US. The Option is exercisable for a period of one year from the date of the Option. If exercised, the Option may be deemed to result in a change in control of InMedica Development Corporation (the “Company”). In connection with the grant of the Option, Chi Lin granted to Larry Clark and Ralph Henson and Richard Bruggeman, and the survivors or survivor of them, with full power of substitution, for a period of one year, an irrevocable proxy empowering Clark, Henson and Bruggeman to unanimously vote the InMedica shares held by Chi Lin in any vote on a proposed merger or acquisition with x-Mobility, Ron Conquest, and /or affiliates. Use of the proxy is limited to use at any shareholders’ meeting or any consent resolution of the shareholders of InMedica that may be necessary or recommended by counsel to approve a merger or acquisition transaction between InMedica and Synergisitc Equities and/or its affiliates, including Ron Conquest, x-Mobility and/or others.

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

99.1	Option to Purchase Common Stock dated September 10, 2008

99.2	Proxy dated September 10, 2008

SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this amended 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: November 13, 2008

EXHIBIT INDEX - INMEDICA DEVELOPMENT CORPORATION

FORM 10Q – SEPTEMBER 30, 2008

EXHIBIT NUMBER	DESCRIPTION

(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

99.1	Option to Purchase Common Stock dated September 10, 2008

99.2	Proxy dated September 10, 2008