Edgar Filing: instaCare Corp.

10Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended September 30, 2008

¨ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 000-29315

InstaCare Corp. .

(Exact name of registrant as specified in its charter)


Nevada		91-2105842
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

2660 Townsgate Road, Suite 300

Westlake Village, California 91361 .

(Address of principal executive offices)

(805) 466-1973 .

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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 S No ¨

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	¨ (Do not check if a smaller reporting company)	Smaller reporting company	S

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

The number of shares of Common Stock, $0.001 par value, outstanding on November 14, 2008, was 43,112,355 shares.

PART 1 – FINANCIAL INFORMATION

Item 1. Financial Statements


instaCare, Corp.
Condensed Consolidated Balance Sheets

				September 30,		December 31,
				2008		2007
				(Unaudited)		Audited
Assets
Current assets:
	Cash		$	32,296	$	4,353
	Accounts receivable			1,293,848		669,041
	Inventory			303,965		96,450
	Prepaid expenses			8,304		3,816
		Total current assets		1,638,413		773,660

Fixed assets net of accumulated depreciation of
		$172,188 and $145,000, respectively		9,061		36,250

Other assets
	Deposits			3,412		3,412
	Amortizable loan fees			26,045		-
		Total other assets		29,457		3,412

		Total assets	$	1,676,931	$	813,322


instaCare, Corp.
Condensed Consolidated Balance Sheets

Liabilities and Stockholders’ Deficit

Current liabilities:
	Accounts payable			$	39,475	$	120,107
	Accrued liabilities				196,500		199,265
	Accrued interest				554,363		412,837
	Line of credit				787,501		467,044
	Demand note – related party				1,779		280
	Notes payable, current portion				193,199		181,021
	Convertible notes payable				1,452,689		1,377,689
			Total current liabilities		3,225,506		2,758,243

Long-term debt, net of current portion					43,727		85,109

Stockholders’ (deficit)

Preferred stock, $0.001 par value, 2,249,000 shares authorized,
	207,526 shares issued and outstanding as of September 30, 2008
	and December 31, 2007, respectively				207		207
Preferred series “A” stock, $0.001 par value, 750,000 shares
	authorized, no shares issued and outstanding as of September 30, 2008				-		-
	and December 31, 2007, respectively
Preferred series “C” stock, $0.001 par value, 1,000,000 shares
	authorized, 17,860 shares issued and outstanding as of
	September 30, 2008 and December 31, 2007				18		18
Preferred series “D” stock, $0.001 par value, 1,000 shares
	authorized no shares issued and outstanding as of September 30, 2008
	and December 31, 2007				-		-
Preferred series “E” stock, $0.001 par value, 1,000,000 shares authorized
		14,900 and no shares issued and outstanding as of September 30, 2008
		and December 31, 2007, respectively			15		-
Common stock, $0.001 par value, 1,750,000,000 shares authorized,
	43,112,355 and 29,200,026 shares issued and outstanding as of
	September 30, 2008 and December 31, 2007				43,113		29,200
Shares authorized and unissued, 944,029 and 3,700,294 as of
September 30, 2008 and December 31, 2007, respectively					944		3,700
Additional paid in capital					17,797,367		17,353,200
Dividend payable					431,125		292,392
Accumulated (deficit)					(19,865,091)		(19,709,747)
	Total stockholders’ (deficit)				(1,592,302)		(2,030,030)

			Total liabilities and stockholders’ (deficit)	$	1,676,931	$	813,322

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


InstaCare, Corp.
Condensed Consolidated Statements of Operations
(Unaudited)

				Three Months Ended				Nine Months Ended
				September 30,				September 30,
				2008		2007		2008		2007

Revenue			$	3,439,271	$	1,585,538	$	9,257,347	$	3,705,669
Cost of sales				3,233,370		1,327,518		8,259,316		3,124,822

Gross profit				205,901		258,020		998,031		580,847

Expenses:
	General & administrative			66,319		48,820		191,623		230,345
	Consulting			25,804		225,597		119,539		603,674
	Payroll expense			47,335		74,358		247,670		162,256
	Professional fees			6,184		1,680		73,781		83,656
	Depreciation and amortization			9,063		11,618		27,189		35,108
		Total expenses		154,705		362,073		659,802		1,115,039

Net operating income (loss)				51,196		(104,053)		338,229		(534,192)

Other income (expense):
	Financing costs			(70,527)		(3,205)		(186,788)		(14,328)
	Interest expense, net			(56,823)		(56,293)		(168,216)		(168,786)
	Total other income (expense)			(127,350)		(59,498)		(355,004)		(183,114)

Net income (loss)				(76,154)		(163,551)		(16,775)		(717,306)

Add: Dividends declared on preferred				-		-		-		-

Income (loss) available to common shareholders'			$	(76,154)	$	(163,551)	$	(16,775)	$	(717,306)

Weighted average number of
common shares outstanding- basic				42,008,804		13,155,843		38,201,135		11,702,736

Net income (loss) per share – basic			$	(0.00)	$	(0.01)	$	(0.00)	$	(0.06)

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


InstaCare, Corp.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
				Nine Months Ended
				June 30,
				2008		2007
Cash flows from operating activities
Net income (loss)			$	(16,775)	$	(717,306)
Adjustments to reconcile net (loss) to
	net cash (used) by operating activities:
	Shares issued for services and fees			126,453		356,072
	Shares issued for financing			147,518		-
	Warrants issued for financing			62,500
	Options and warrants issued for services			12,853		356,646
	Amortization of options issued for services			105,000		9,328
	Depreciation and amortization			27,189		35,108
	Changes in operating assets and liabilities
		Accounts receivable		(624,807)		(282,482)
		Inventory		(207,515)		-
		Prepaid expenses		(30,354)		(3,822)
		Accounts payable		(80,632)		(136,641)
		Accrued interest		141,523		163,879
		Accrued liabilities		(2,762)		(30,602)
Net cash (used) by operating activities				(39,809)		(249,820)

Cash flows from financing activities
	Proceeds from line of credit, net			320,457		-
	Proceeds from note payable - related party			1,500		155,430
	Payments on note payable - related party			-		(68,150)
	Payments on notes payable			(29,205)		-
	Proceeds from convertible note payable			75,000		-
	Payments on convertible note payable			-		(33,239)
	Exercise of options			-		225,708
	Exercise of common stock			-		10,000
Net cash provided by financing activities				367,752		289,749

Net increase in cash				27,943		39,929
Cash – beginning				4,353		19,501
Cash – ending			$	32,296	$	59,430

Supplemental disclosures:
	Interest paid		$	23,229	$	1,962
	Income taxes paid		$	-	$	-
Non-cash transactions:
	Shares issued for services		$	126,453	$	356,072
	Options and warrants issued for services		$	12,853	$	356,646
	Shares, warrants and options issued for financing		$	210,018	$	-
	Shares issued for debt conversion		$	-	$	50,000
	Shares issued for debt conversion – related party		$	-	$	150,000
	Accounts payable converted to note payable		$	-	$	160,385

The accompanying notes are an integral part of these condensed consolidated financial statements

instaCare, Corp.

Notes to Condensed Consolidated Financial Statements

(unaudited)

Note 1 – Basis of presentation

The condensed consolidated interim financial statements included herein, presented in accordance with United States generally accepted accounting principles and stated in US dollars, have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading.

These statements reflect all adjustments, consisting of normal recurring adjustments, which, in the opinion of management, are necessary for fair presentation of the information contained therein. It is suggested that these consolidated interim financial statements be read in conjunction with the consolidated financial statements of the Company for the period ended December 31, 2007 and notes thereto included in the Company's Form 10-K. The Company follows the same accounting policies in the preparation of consolidated interim reports.

The Company was organized March 2, 2001 (Date of Inception) under the laws of the State of Nevada as ATR Search Corporation. On June 21, 2002, the Company merged with Medicius, Inc. and filed amended articles of incorporation changing its name to CareDecision Corporation and subsequently changed its name to instaCare Corp. effective February 17, 2005.

Results of operations for the interim periods are not indicative of annual results.

Note 2 – Going concern

The Company has an accumulated deficit of $19,865,091 as of September 30, 2008. These accumulated conditions have raised substantial doubt about the Company's ability to continue as a going concern. Although the Company’s recent growth have greatly improved its cash flows, the Company nonetheless needs to obtain additional financing to fund payment of obligations and to provide working capital for operations. Management is seeking additional financing, and is now looking for a merger or acquisition candidate. The Company intends to acquire interests in various business opportunities, which in the opinion of management will provide a profit to the Company. Management believes these efforts will generate sufficient cash flows from future operations to pay the Company's obligations and working capital needs. There is no assurance any of these transactions will occur. The financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result should the Company be unable to continue as a going concern.

Note 3 – Fixed assets

Depreciation expense totaled $27,189 and $35,108 for the nine-month period ended September 30, 2008 and 2007, respectively.

Note 4 – Notes payable

Notes payable consisted of the following:


		September 30,		December 31,
		2008		2007

Demand note from a related party, bearing interest at 9.5%	$	1,780	$	280

Revolving line of credit, with interest being paid in shares equal to 5% of each advance.		787,501		467,044

Promissory note, Bearing interest at 9% per annum, maturing June 20, 2010.		106,926		136,131

Convertible promissory note, bearing interest at 15% per annum, maturing June 30, 2009.		75,000		-

Promissory note, bearing interest at 9.5% per annum, Matured August 25, 2006, currently in default.		87,309		87,309

Convertible promissory note, bearing interest at 12% per annum, matured December 24, 2006, currently in default.		920,379		920,379

Convertible promissory note, bearing interest at 1.25% per month, matured October 31, 2007, currently in default.		170,000		170,000

Promissory note, bearing interest at 12% per annum, matured July 31, 2006, currently in default.		130,000		130,00

Convertible promissory note, bearing interest at 1.5% monthly, matured May 16, 2007, currently in default.		200,000		200,000

Total notes payable		2,478,895		2,111,143

Less current portion		2,435,168		2,026,034

Total long-term notes payable	$	43,727	$	85,109

The Company recorded interest expense totaling $168,216 and $168,786 during the nine-months ended September 30, 2008 and 2007, respectively.

Note 5 – Stockholder’s equity

We are authorized to issue 5,000,000 shares of $0.001 par value preferred stock; of which 750,000 shares are designated as Series A, 20,000 shares are designated as Series C, 1,000 shares are designated as Series D and 1,000,000 shares are designated as Series E. The Company is authorized to issue 1,750,000,000 shares of $0.001 par value common stock.

On January 2, 2008, we issued 3,700,294 shares of common stock previously authorized.

On January 11, 2008, we issued 400,000 shares of our common stock valued at $16,000 for consulting services. In connection with the shares, we also issued a warrant to purchase up to 400,000 shares of our common stock at an exercise price of $0.078 per share expiring on December 31, 2010. The fair value of the warrant was $12,853 using the Black-Scholes valuation model.

We issued 216,775 shares of our common stock on January 31, 2008 pursuant to a consulting agreement with Cape McKinnon, Inc. We have recorded consulting expense in the amount of $6,503, representing the fair value of the shares issued. Further, we terminated this agreement effective June 30, 2008.

On February 29, 2008, we issued 150,000 shares of our common stock to an individual for services received pursuant to a consulting agreement. The fair value of $1,650 was recorded as a consulting expense during the nine-months ended September 30, 2008.

On May 6, 2008, we issued 400,000 shares of our common stock for services and recorded consulting expense in the amount of $4,000 representing the fair value of the shares issued.

On May 7, 2008, we issued 40,000 to Steve Milic for license fees valued at $800. In addition, we issued 180,000 shares of our common stock to Mr. Milica's for consulting fees valued at $3,600, the fair value of the shares issued.

On May 7, 2008 we issued 20,000 shares of our common stock to an individual for consulting fees valued at $400, the fair value of the shares issued.

During the nine-months ended September 30, 2008, we issued 6,025,009 shares of our common stock and 14,900 shares of our preferred series “E” stock to Centurion Credit Resources, LLC pursuant to our financing agreement. These shares represent a 5% financing fee for each advance received during each of the nine months ended September 30, 2008. The fair value of the shares is $147,532, and has been recorded as financing fees. At September 30, 2008, 944,029 shares remained unissued.

During the nine-months ended September 30, 2008, we issued 4,450,000 shares of our common stock in lieu of compensation to employees and officers of the Company for services received during the nine-months ended September 30, 2008. We have record payroll expense in the amount of $93,500, the fair value of the shares issued.

Note 6 – Warrants and options

On February 7, 2008, 1,293,750 warrants issued to Mercator Momentum Fund, LP and Monarch Pointe Fund Ltd. and Pylon Management expired.

On September 30, 2008, 32,500 warrants issued to IJWertz Group expired.

On January 11, 2008, we issued 400,000 warrants with an exercise price of $0.078 per share for consulting services. The warrants expire on December 31, 2010. The fair market value of the warrants based on the Black-Scholes model is $12,853 using the following assumptions: Strike Price $0.078; Stock Price $0.04; Volatility 167%; Term 2.75 years; Dividend Yield 0%; Interest Rate 2.61%. As of September 30, 2008, we recorded consulting expense in the amount of $12,853.

On March 1, 2008, we issued a warrant to purchase 7,500,000 shares of our common stock with an exercise price of $0.03 pursuant to of loan agreement. The fair market value of the warrants based on the Black-Scholes model is $62,501 using the following assumptions: Strike Price $0.003; Stock Price $0.00; Volatility 171%; Term 2.75 years; Dividend Yield 0%; Interest Rate 1.87%. As of September 30, 2008, we have recorded financing expense in the amount of $5,208 and amortizable loan fees of $57,293 to be amortized over the one year term of the note. As of September 30, 2008, the unamortized amount was $26,045.

A summary of outstanding stock options and warrants as of September 30, 2008 is as follows:


	Options		Warrants
Outstanding 01/01/08	825,000	$ 1.73	2,662,090	$ 1.03
Granted	-	-	7,900,000	0.03
Cancelled	-	-	(1,326,250)	1.96
Exercised	-	-	-	-
Outstanding 09/30/08	825,000	$ 1.73	9,235,840	$ 0.04

Note 8 – Subsequent events

On October 20, 2008 we renewed our agreement with Centurion Credit Resources, LLC. As inducement for the renewal, Centurion increased our available credit from $1,000,000 to $2,000,000.

FORWARD-LOOKING STATEMENTS

This document contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact are “forward-looking statements” for purposes of federal and state securities laws, including, but not limited to, any projections of earnings, revenue or other financial items; any statements of the plans, strategies and objections of management for future operations; any statements concerning proposed new services or developments; any statements regarding future economic conditions or performance; any statements or belief; and any statements of assumptions underlying any of the foregoing.

Forward-looking statements may include the words “may,” “could,” “estimate,” “intend,” “continue,” “believe,” “expect” or “anticipate” or other similar words. These forward-looking statements present our estimates and assumptions only as of the date of this report. Accordingly, readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the dates on which they are made. We do not undertake to update forward-looking statements to reflect the impact of circumstances or events that arise after the dates they are made. You should, however, consult further disclosures we make in future filings of our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.

Although we believe that the expectations reflected in any of our forward-looking statements are reasonable, actual results could differ materially from those projected or assumed in any of our forward-looking statements. Our future financial condition and results of operations, as well as any forward-looking statements, are subject to change and inherent risks and uncertainties. The factors impacting these risks and uncertainties include, but are not limited to:

increased competitive pressures from existing competitors and new entrants;

increases in interest rates or our cost of borrowing or a default under any material debt agreements;

deterioration in general or regional economic conditions;

adverse state or federal legislation or regulation that increases the costs of compliance, or adverse findings by a regulator with respect to existing operations;

loss of customers or sales weakness;

inability to achieve future sales levels or other operating results;

the unavailability of funds for capital expenditures and/or general working capital; and

operational inefficiencies in distribution or other systems.

our ability to recruit and hire key employees;

the inability of management to effectively implement our strategies and business plans; and

the other risks and uncertainties detailed in this report.

For a detailed description of these and other factors that could cause actual results to differ materially from those expressed in any forward-looking statement, please see “Risk Factors” in this document and in our Annual Report on Form 10-K for the nine months ended September 30, 2008.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Overview of Current Operations

We are a publicly-traded distributor of life-saving and life-enhancing prescription drugs and diagnostics to several channels in the healthcare industry, a developer of patent-pending technologies for e-health and EMR applications that we employ to leverage and add value to our prescription drug and diagnostics business, and a Wi-Fi PDA technology provider to the lodging industry. We have recently added modules to our medical and EMR applications that allow for the management of medical products distribution and reporting management. We are in the initial stages of marketing these new modules under the trade name Decision IT.

Our proprietary ResidenceWare, MD@Hand and Practice Probe technologies manage critical data, enhance productivity and e-commerce, and facilitate communication with applications in the healthcare, medical distribution and hotel/motel markets and industries. We have recently focused our business attention towards providing prescription drugs and medical diagnostics through several medical distribution channels.

All of the company’s business is transacted in the United States. We do not sell or ship for export.

During the next 12 months we plan to continue to focus our efforts on the following primary businesses:

Providing medical communication devices based on networks of personal digital assistants (PDA). These products are believed to provide benefits of on demand medical information to private practice physicians, licensed medical service providers such as diagnostic testing laboratories, and medical insurers;

The distribution of medical diagnostic products primarily aimed at institutions that service patients with diabetic and asthma related diseases and ailments. Our current market focus for these products is the assisted living and long term care sector of the larger healthcare market, however we plan to expand into additional sectors where we can service certain chronic ambulatory disease states;

Providing medical communication devices based on networks of personal digital assistants (PDA) and desktop computers with software that manages decision, control, audit and fulfillment for the medical products distribution markets. These products are believed to provide benefits of on demand medical information to medical products manufacturers as part of their financial management of distribution contracts;

The distribution and fulfillment of prescriptions for ethical pharmaceuticals primarily aimed at the indigent and uninsured sectors of the greater medical service markets. Our first market focus for these products will be those state Medicaid and Federally chartered clinics (and initiatives) where funding for pharmaceutical fulfillment enterprises exists;

Building electronic commerce networks based on personal digital assistants (PDA) to the hotels, motels and single building, multi-unit apartment buildings with a desire to offer local advertising and electronic services to their tenants/guests.

Seasonality

The distribution of medical products and medical diagnostics in aggregate account for the overwhelming percentage of our revenues. We have completed 15 quarters of operations in these markets. Our experiences point to a business that displays certain seasonal trends. In each of the last two operating years and the first three quarters of the current year our order intake was concentrated in the first five months of the calendar year and to an identifiable but lesser degree in the last two months of the calendar year. One explanation is that these months correspond with the beginning of a prescription drug plan years where new prescription drug cards are distributed by insurers to their insured in January along with new plan formularies (price schedules). This in turn trends to influence “stocking up” buying/ordering behavior on the part of the insured.

Results of Operations for the three months ended September 30, 2008 and 2007 compared.

The following tables summarize selected items from the statement of operations for the three months ended September 30, 2008 compared to the three months ended September 30, 2007.

INCOME:


		For the three months ended September 30,				Increase (Decrease)
		2008		2007		$	%

Revenue	$	3,439,271	$	1,585,538	$	1,853,733	117%
Cost of Sales		3,233,370		1,327,518		1,905,852	144%

Gross Profit		205,901		258,020		(52,119)	(21%)

Gross Profit Percentage of Sales		6%		16%			(9%)

Revenue

Our revenue for the three months ended September 30, 2008 was $3,439,271 compared to revenue of $1,585,538 in the three months ended September 30, 2007. This resulted in an increase in revenue of $1,853,733, or 117%, from the same period a year ago. The increase in revenue over the three months ended September 30, 2007 was a result of our market focus towards the direct sale of diabetic test strips and medical-surgical products into several prescription drug channels and our expansion into medical surgical products and markets.

Cost of sales / Gross profit percentage of sales

Our cost of sales for the three months ended September 30, 2008 was $3,233,370, an increase of $1,905,852, or 144% from $1,327,518 for the three months ended September 30, 2007. The increase in cost of sales during the current period was expected due to our increased sales over the prior quarter and an increase in our direct to patient market sales.

Gross profit as a percentage of sales decreased from 16% for the three months ended September 30, 2007 to 6% for the three months ended September 30, 2008. The decrease in gross profit margin was due to additional shipping as we have expanded to international national markets. We are currently seeking additional transportation sources and focusing efforts in building a target market to grow our revenue stream with the anticipation of maintaining current costing.

EXPENSES:


		For the Three Months Ended September 30,				Increase / (Decrease)
		2008		2007		Increase / (Decrease)
		Amount		Amount		$	%

Expenses:
General & administrative expenses	$	66,319	$	48,820	$	17,499	36%
Consulting services		25,804		225,597		(199,793)	(89%)
Payroll expense		47,335		74,358		(27,023)	(37%)
Professional fees		6,184		1,680		4,504	268%
Depreciation		9,063		11,618		(2,555)	(22%)
Total expenses		154,705		362,073		(207,368)	(58%)

Net operating income (loss)		51,196		(104,053)		155,249	150%

Other income (expense):
Financing costs		(70,527)		(3,205)		67,322	2101%
Interest expense		(56,823)		(56,293)		530	1%

Net income (loss)	$	(76,154)	$	(163,551)	$	74,518	46%

General and Administrative Expenses

General and administrative expenses for the three months ended September 30, 2008 were $66,319, an increase of $17,499, or 36%, from $48,820 for the three months ended September 30, 2007. We have focused our business development towards targeted market areas for our diabetic testing products, as a result of this focused agenda, we have been able to streamline overhead utilizing only those resources that directly attribute to our sales growth whereby allowing us to eliminate unnecessary general and administrative expenditures. It is the goal of management to continue efforts in limiting redundant overhead.

Consulting Services

We have historically relied on outside consultants for assistance in business development and sales. As we are becoming more seasoned in our pharmaceutical product lines, we have been able to limit the amount of outside services required to build and maintain our market share, evidenced by our decrease in consulting services for the three months ended September 30, 2008. During this quarter we expended $25,804 compared to $225,597 for the three months ended September 30, 2007, representing a decrease of 89% over the same period in the previous year.

Payroll expense

We currently staff five full-time positions. Each of which, assist in sales, marketing and administrative support. We have made tremendous efforts to maintain cash-flow through a reduction in salaries and wages. During the three months ended September 30, 2008 our payroll expense was comprised of cash totaling $15,335 and equity compensation of $32,000 compared to $74,358 in cash for the comparable period in 2007. Currently, our labor expense for the three months ended September 30, 2008 is approximately 2% of our total revenue verses 5% for the same period in the previous year. As our sales continue to grow, we anticipate our payroll expense will also increase at a pro rata rate.

Professional Fees

Our professional fees consist of legal, accounting and public company reporting services. Our fees for these services increased by $4,504 compared to the three months ended September 30, 2008 as a result of a decrease in legal fees. During the three-months ended September 30, 2008 we incurred accounting fees of $4,500 and reporting costs of $1,684 compared to $7,700 in accounting fees, $6,750 in legal fees and $1,556 in reporting fees for the three-month period ended September 30, 2007. During the three month period in 2007, we received a credit in accounting fees in the amount of $14,236 as a professional courtesy. We do not anticipate any further discounts and expect the current period fees to be representative of our near term costs.

Depreciation

Depreciation for the three months ended September 30, 2008 was $9,063, a decrease of $2,555 from $11,618 for the three months ended September 30, 2007. The decrease in depreciation is the expected result of asset reaching their expected useful lives.

Total Expenses

Our operating expenses decreased $207,368 or 58% overall for the three months ended September 30, 2008. Our streamlined operational environment and limitations on the use of outside consultants has allowed for the decrease in total operational costs.

Net Operating Income (Loss)

We had net operating income in the amount of $51,196 for the three months ended September 30, 2008, versus a net operating loss of $104,053 for the three months ended September 30, 2007, an increase of net operating income totaling $155,249. As we maintain our business focus toward building sales and minimizing unnecessary overhead, we look forward to continued increases in net operating income.

Financing Costs

Financing costs for the three months ended September 30, 2008 were $70,527, an increase of $67,322 compared to $3,205 for the three months ended September 30, 2007. Our financing costs have increased substantially as a result of our revolving line of credit with Centurion Credit Resources LLC. This agreement allows us the necessary capital to finance and turn our inventory creating an ability to generate revenue we had not previously had due to our significant deficiencies in working capital. Our agreement with Centurion requires an interest payment equal to 5% of each advance. Interest payments are made to Centurion with common stock of the Company. The ability to pay in shares allows us to build our own working capital through the gross profit received on each sale with the anticipation of limiting the necessity for future working capital financing.

Interest Expense

Our interest expense has remained consistent at $56,823 with the comparable period one year ago. Until such time as we are able to pay down or convert our existing debt, we anticipate a continued expense of this amount throughout the up coming year.

Net Income (Loss)

We experienced net loss for the three months ended September 30, 2008 in the amount $76,154, a decrease of $74,518 from our previous comparative net loss of $163,551. The decrease in net loss was attributable to our overall decrease in general and administrative expenses and consulting fees during the quarter, as noted above.

Results of Operations for the nine months ended September 30, 2008 and 2007 compared.

The following tables summarize selected items from the statement of operations for the three months ended September 30, 2008 compared to the three months ended September 30, 2007.

INCOME:


		For the nine months ended September 30,				Increase (Decrease)
		2008		2007		$	%

Revenue	$	9,257,347	$	3,705,669	$	5,551,678	150%
Cost of Sales		8,259,316		3,124,822		5,134,494	156%

Gross Profit		998,031		580,847		417,184	72%

Gross Profit Percentage of Sales		11%		16%			(4%)

Revenue

Our revenue for the nine months ended September 30, 2008 was $9,257,347 compared to revenue of $3,705,669 in the nine months ended September 30, 2007. This resulted in an increase in revenue of $5,551,678, or 150%, from the same period a year ago. The increase in revenue over the three months ended September 30, 2007 was a result of our expansion into international markets. We are currently working towards intensifying our overseas markets in an effort to add additional revenue streams to our developing direct sales of diabetic testing products.

Cost of sales / Gross profit percentage of sales

Our cost of sales for the nine months ended September 30, 2008 was $8,259,316, an increase of $5,134,494, or 156% from $3,124,822 for the nine months ended September 30, 2007. The increase in cost of sales during the current period was expected due to our increased sales over the prior quarter and an increase in our direct to patient market sales.

Gross profit as a percentage of sales decreased from 16% for the nine months ended September 30, 2007 to 11% for the nine months ended September 30, 2008. During the third quarter we made a change in our primary supplier in anticipation of achieving a higher margin on our sales through stronger buying power on increased volume. Though we did see stronger margins in our domestic sales, the costs associated with our emergence into international markets offset our domestic savings. We are predicting moderate increases in our gross profit margin as we continued to build our international distribution channels.

EXPENSES:


		For the Nine Months Ended September 30,
		2008		2007		Increase / (Decrease)
		Amount		Amount		$	%

Expenses:
General & administrative expenses	$	191,623	$	230,345	$	(38,722)	(17%)
Consulting services		119,539		603,674		(484,135)	(81%)
Payroll expense		247,670		162,256		85,414	53%
Professional fees		73,781		83,656		(9,875)	(12%)
Depreciation		27,189		35,108		(7,919)	(23%)
Total expenses		659,802		1,115,039		(455,237)	(41%)

Net operating income (loss)		338,230		(534,192)		872,422	164%

Other income (expense):
Financing costs		(186,788)		(14,328)		172,460	1204%
Interest (expense)		(168,216)		(168,786)		(570)	-%

Net income (loss)	$	(16,775)	$	(717,306)	$	(700,531)	(98%)

General and Administrative Expenses

General and administrative expenses for the nine months ended September 30, 2008 were $191,623, a decrease of $38,722, or 17%, from $230,345 for the nine months ended September 30, 2007. We have focused our business development towards targeted market areas for our diabetic testing products, as a result of this focused agenda, we have been able to streamline overhead utilizing only those resources that directly attribute to our sales growth whereby allowing us to eliminate unnecessary general and administrative expenditures. It is the goal of management to continue efforts in limiting redundant overhead.

Consulting Services

We have historically relied on outside consultants for assistance in business development and sales. As we are becoming more seasoned in our pharmaceutical product lines, we have been able to limit the amount of outside services required to build and maintain our market share, evidenced by our decrease in consulting services for the nine months ended September 30, 2008. During this quarter we expended $119,539 compared to $603,674 for the nine months ended September 30, 2007, representing a decrease of 81% over the previous period.

Payroll expense

We currently staff five full-time positions. Each of which, assist in sales, marketing and administrative support. We have made tremendous efforts to maintain cash-flow through a reduction in salaries and wages. During the nine months ended September 30, 2008 our payroll expense was comprised of cash totaling $49,170 and equity compensation of $198,500 compared to $115,800 in cash and $52,500 in equity based compensation for the comparable period in 2007. Currently, our labor expense is approximately 3% of our total revenue verses 5% for the same period in the previous year. As our sales continue to grow, we anticipate our payroll expense will also increase at a pro rata rate.

Professional Fees

Our professional fees consist of legal, accounting and public company reporting services. Our fees for these services decreased by $9,875 compared to the nine months ended September 30, 2008 as a result of a decrease in legal fees. During the nine-months ended September 30, 2008 we incurred accounting fees of $68,502 and reporting costs of $5,279 compared to $49,450 in accounting fees, $22,250 in legal fees and $11,956 in reporting fees for the nine month period ended September 30, 2007. We anticipate these fees to remain stable throughout the remainder of the year.

Depreciation

Depreciation for the nine months ended September 30, 2008 was $27,189, a decrease of $7,919 from $35,108 for the nine months ended September 30, 2007. The decrease in depreciation is the expected result of asset reaching their expected useful lives.

Total Expenses

Our operating expenses decreased $455,237 or 41% overall for the nine months ended September 30, 2008. Our streamlined operational environment and limitations on the use of outside consultants has allowed for the decrease in total operational costs.

Net Operating Income (Loss)

We had net operating income in the amount of $338,230 for the nine months ended September 30, 2008, versus a net operating loss of $534,192 for the nine months ended September 30, 2007, an increase of net operating totaling $872,422. As we maintain our business focus toward building sales and minimizing unnecessary overhead, we look forward to a continued reward of positive earnings results.

Financing Costs

Financing costs for the nine months ended September 30, 2008 were $186,788, an increase of $172,460 compared to $14,328 for the nine months ended September 30, 2007. Our financing costs have increased substantially as a result of our revolving line of credit with Centurion Credit Resources LLC. This agreement allows us the necessary capital to finance and turn our inventory creating an ability to generate revenue we had not previously had due to our significant deficiencies in working capital. Our agreement with Centurion requires an interest payment equal to 5% of each advance. Interest payments are made to Centurion with common stock of the Company. The ability to pay in shares allows us to build our own working capital through the gross profit received on each sale with the anticipation of limiting the necessity for future financing of working capital.

Interest Expense

Our interest expense has remained consistent at $168,216 with the comparable period one year ago. Until such time as we are able to pay down or convert our existing debt, we anticipate a continued expense of this amount throughout the up coming year.

Net Income (Loss)

We recognized a net loss for the nine months ended September 30, 2008 in the amount $16,775 a decrease in net loss of $700,531 from our previous year net loss of $717,306. The decrease in net loss and our resulting profit was attributable to our overall decrease in general and administrative expenses and consulting fees during the quarter, as noted above.

Liquidity and Capital Resources

A critical component of our operating plan impacting our continued existence is the ability to obtain additional capital through additional equity and/or debt financing. We do not anticipate generating sufficient positive internal operating cash flow until such time as we can deliver our product to market, complete additional financial service company acquisitions and generate substantial revenues, which may take the next few years to fully realize. In the event we cannot obtain the necessary capital to pursue our strategic plan, we may have to cease or significantly curtail our operations. This would materially impact our ability to continue operations.

The following table summarizes our current assets, liabilities and working capital at September 30, 2008 compared to December 31, 2007.


		September 30, 2008		December 31, 2007		Increase / (Decrease)
		September 30, 2008		December 31, 2007		$	%

Current Assets	$	1,638,413	$	773,660	$	864,753	112%
Current Liabilities		3,225,506		2,758,243		467,263	17%
Working Capital Deficit	$	1,587,093	$	1,984,583	$	397,490	20%

Internal and External Sources of Liquidity

MAG Entities Agreement

On February 7, 2005, we entered into agreements with Mercator Momentum Fund, LP and Monarch Pointe Fund, Ltd. (collectively, the “Purchasers”) and Mercator Advisory Group, LLC (“MAG”). Under the terms of the agreement, we agreed to issue and sell to the Purchasers, and the Purchasers agreed to purchase from the Company, 20,000 shares of Series “C” Convertible Preferred Stock at $100.00 per share. Additionally, we issued 1,250,000 warrants to purchase share of our common stock at $1.60 per share, all of the warrants expired on February 7, 2008. To date, MAG has converted 2,140 shares of their Series “C” preferred into 1,372,901 shares of our restricted common stock. On October 8, 2008 the company received a letter from Kroll (BVI) Limited of the British Virgin Islands informing the company that the Monarch Pointe Fund, Ltd had lapsed into receivership. The company was advised to cease all communications with Monarch Pointe Fund, Ltd. And Mercator Advisory Group, LLC.

Pinnacle Investment Partners, LP Promissory Note

On March 24, 2004, we entered into a Secured Convertible Promissory Note with Pinnacle Investment Partners, LP for the principal amount of $700,000 with an interest rate of 12% per annum. On February 10, 2005 we entered into a note extension agreement whereby Pinnacle agreed to advance an additional $400,000 and extend the maturity until April 24, 2006. On July 1, 2006, we entered into a second extension of the note which matured on December 24, 2006. We are accruing interest at a default rate of 12% per annum. The note is convertible at a rate of $0.30 per share and has been secured by 2,212,500 shares of our common stock which can be sold by the lender as a means to repay the balance due. As of September 30, 2008, Pinnacle has sold 924,948 escrow shares valued at $406,215 which has been applied to accrued interest and the principal balance of the note.

Since August 3, 2006, the Company has not had contact with any of the Pinnacle fund management or attorney in fact. We have not delivered the shares called for under the July 1, 2006 extension after being advised by the fund management to “stand still.” On September 23, 2008 the company received a phone call from an attorney formerly associated with Pinnacle Investment Partners, LP and was advised that the fund had ceased operations, and was closed. We were also informed that of the two fund principals, one was deceased and the other incarcerated until at least 2010.

Promissory Notes with Dennis Cantor and Novex International

On May 23, 2006, we entered into a promissory note with Dennis Cantor and Novex International for the principal amount of $255,000. Pursuant to the note we promised to pay Dennis Cantor and Novex International the sum of $255,000 together with interest at a rate of one half of one percent (0.5%) every ten days beginning on May 23, 2006 and running through the maturity date of June 30, 2006. In the case of a default in payment of principal, all overdue amounts under the note shall bear a penalty obligation at a rate of twelve percent (12%) per annum accruing from the maturity date. On July 1, 2006, we extended the note to July 31, 2006. We have made principal payments of $125,000. As of September 30, 2008, the remaining principal balance was $130,000.

Convertible Loan Payment Agreement

On July 17, 2006, we entered into a convertible loan payment agreement with Wayne G. Knapp wherein Mr. Knapp agreed to loan the Company the sum of $200,000. The loan is for 120 days. On October 17, 2006, we renewed the note. On January 17, 2007, the parties verbally agreed to a renewal that expires on May 16, 2007. The note accrues monthly interest at a rate of 1.50% and the interest is payable quarterly in cash. The total amount owing pursuant to the agreement, was convertible at the option of Mr. Knapp at any time from July 17, 2006 until November 30, 2006, at the strike price equal to $0.32 per share or 90% of the final bid price of our common stock on the day prior to conversion with a floor price of $0.10 per share. We renewed Mr. Knapp’s conversion option on January 17, 2007. We also issued Mr. Knapp a warrant to purchase 50,000 shares of our common stock at $0.32 per share through December 31, 2008. Mr. Knapp exercised his option on March 30, 2007.

Centurion Credit Resources

On November 17, 2007, we entered into an agreement with Centurion Credit Resources, LLC to secure a $1,000,000 revolving credit facility that is geared specifically to our business. As of October 2008 the company renewed its agreement with Centurion Credit Resources, LLC until November 17, 2009 and as an inducement to renew the credit line was increased to $2,000,000. This facility, offered to us at market credit rates. Terms of the credit facility allow us to increase the available credit in increments of $250,000 as our business grows. We drew down on this credit line for the first time on November 30, 2007. As of September 30, 2008 we have draw down $7,661,816 and repaid $7,341,359. We believe that this facility will adequately finance our at home diabetes diagnostics business through revenues rates of $10.0 million per quarter. We are also entertaining additional proposed credit facilities with various hedge funds, commercial banks and a religious fund.

Cragmont Capital, LLC

On March 1, 2008, we entered into a Convertible Promissory Note Purchase Agreement with Cragmont Capital, LLC (“Cragmont”) wherein Cragmont agreed to loan the Company an aggregate sum of $250,000. As of September 30, 2008, we have received $75,000. The loan is for one year, maturing on February 28, 2009. The total amount owing pursuant to the agreement, is convertible at the option of the lender, at a strike price equal to $0.015 per share. Further we have agreed to issues 100 warrants with a strike price of $0.03 expiring on December 31, 2010 for every dollar loaned by Cragmont. During the nine months ended September 30, 2008, we have terminated our relationship with Cragmont.

Cash Flow. Since inception, we have primarily financed our cash flow requirements through the issuance of common stock, the issuance of notes and sales generated income. With the growth of our current business in 2008 we may, during our normal course of business, experience net negative cash flows from operations, pending receipt of revenue which often are delayed as a result of the nature of the healthcare industry. Further, we may be required to obtain financing to fund operations through additional common stock offerings and bank or other debt borrowings, to the extent available, or to obtain additional financing to the extent necessary to augment our available working capital.

Satisfaction of our cash obligations for the next 12 months.

As of September 30, 2008, our cash balance was $32,296. Our plan for satisfying our cash requirements for the next twelve months is through additional equity, third party financing, and/or debt financing. We anticipate sales-generated income during that same period of time, but do not anticipate generating sufficient amounts of positive cash flow to meet our working capital requirements. Consequently, we intend to make appropriate plans to insure sources of additional capital in the future to fund growth and expansion through additional equity or debt financing or credit facilities.

As we expand operational activities, we may continue to experience net negative cash flows from operations, pending receipt of sales or development fees, and will be required to obtain additional financing to fund operations through common stock offerings and debt borrowings to the extent necessary to provide working capital. We received a substantial number of sales orders and refill orders beginning in mid-September 2006 which we could not fill. It was not until the company entered into the agreement with Centurion Credit Resources, LLC that the company could fill orders for patients and customers on a continuous basis. Until the Centurion credit line was put in place we managed to keep a small portion of our distribution activities going when our limited resources allowed us.

Given our recent operating history, predictions of future operating results difficult to ascertain. The recent addition of a credit line has helped but we have found it increasingly difficult to transact commerce in the very cash intensive prescription drug industry. Thus, our prospects must be considered in light of the risks, expenses and difficulties frequently encountered by companies in their early stages of commercial viability, particularly companies in new and rapidly evolving technology markets. Such risks include, but are not limited to, an evolving and unpredictable business model and the management of growth. To address these risks we must, among other things, implement and successfully execute our business and marketing strategy, continue to develop and upgrade technology and products, respond to competitive developments, and continue to attract, retain and motivate qualified personnel. There can be no assurance that we will be successful in addressing such risks, and the failure to do so can have a material adverse effect on our business prospects, financial condition and results of operations.

Expected purchase or sale of plant and significant equipment.

We do not anticipate the purchase or sale of any plant or significant equipment; as such items are not required by us at this time.

Going Concern

The financial statements included in this filing have been prepared in conformity with generally accepted accounting principles that contemplate the continuance of the Company as a going concern. The Company's cash position is currently inadequate to pay all of the costs associated with testing, production and marketing of products. Management intends to use borrowings and security sales to mitigate the effects of its cash position, however no assurance can be given that debt or equity financing, if and when required will be available. The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets and classification of liabilities that might be necessary should the Company be unable to continue existence.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results or operations, liquidity, capital expenditures or capital resources that is material to investors.

Critical Accounting Policies and Estimates

Stock-based Compensation: In December 2004, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standard No. 123 (revised 2004) “Share-Based Payment” (“SFAS 123R), which is a revision of FASB Statement No. 123, Accounting for Stock-Based Compensation. Statement 123(R) supersedes APB Opinion No. 25, Accounting for Stock Issued to Employees, and amends FASB Statement No. 95, Statement of Cash Flows. Generally, the approach in Statement 123R is similar to the approach described in Statement 123. However, Statement 123R requires all share-based payments to employees, including grants of employee stock options, to be recognized in the income statement based on their fair values. Pro forma disclosure is no longer an alternative.

Recent Accounting Developments

In May 2008, the FASB issued SFAS No. 162 (“FAS 162”), “The Hierarchy of Generally Accepted Accounting Principles”. FAS 162 sets forth the level of authority to a given accounting pronouncement or document by category. Where there might be conflicting guidance between two categories, the more authoritative category will prevail. FAS 162 will become effective 60 days after the SEC approves the PCAOB’s amendments to AU Section 411 of the AICPA Professional Standards. FAS 162 has no effect on our financial position, statements of operations, or cash flows at this time.

As of January 1, 2008 we adopted SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities” (“SFAS No. 159”). SFAS No. 159 allows the company to choose to measure many financial assets and financial liabilities at fair value. Unrealized gains and losses on items for which the fair value option has been elected are reported in earnings. The adoption of SFAS 159 has not had a material impact on our financial position, results of operation or cash flows.

As of January 1, 2008 we adopted SFAS No. 157, “Fair Value Measurements” (“SFAS No. 157”). SFAS No. 157 defines fair value and provides guidance for measuring and disclosing fair value. The adoption of SFAS 157 has not had a material impact on our financial position, results of operation or cash flows.

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

Not applicable.

Item 4T. Controls and Procedures.

Our Principal Executive Officer and Chief Financial Officer, Keith Berman, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this Report. Based on the evaluation, Mr. Berman concluded that our disclosure controls and procedures are effective in timely alerting him to material information relating to us (including our consolidated subsidiaries) required to be included in our periodic SEC filings.

There were no changes in our internal control over financial reporting that occurred during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II--OTHER INFORMATION

Item 1. Legal Proceedings.

We transact commerce in several medical products market channels. We also transact electronic commerce moving confidential medical data through our proprietary medical information technology devices and networks. Healthcare is a very litigious industry. The industry is also very intertwined. From time to time, we may become involved in claims and litigation that arise out of the normal course of business or the normal course of the business of our suppliers, payors, partners, patients and customers. Other than as noted below there are no pending matters at the current time that in management’s judgment may be considered potentially material to us

instaCare Corp. vs. Ronald Kelly, et. al. (“Kelly”)

In July of 2005, the Company filed a complaint in the United States District Court, for the Central District of California (Case Number CV 05-4932-RSWL), against Ronald Kelly, Linda R. Kelly, Kimberly Kelly, and Kelly Company World Group, Inc., seeking damages for:

Fraud;

Declaratory Relief;

Breach of Fiduciary Duty;

RICO violations;

Injunctive Relief;

Conversion;

Breach of Contract/Breach of Corporate Merger Agreement; and

Accounting and Ancillary Relief.

On December 18, 2006, the United States District Court, for the Central District of California ordered, adjudged and decreed that the Company shall have judgment against Kelly in the amount of $200,000, pursuant to the stipulation of the parties.

In addition, pursuant to a mutual release agreement executed by both parties, Kelly waived any right, claim or ownership interest in any shares of common stock of the Company. Kelly returned 31,958,000 (pre-reverse split) shares of common stock to the Company which were placed in one of the Company’s majority owned subsidiaries. The Company has recently stepped up its efforts to collect on this judgment. On October 10, 2008 the company received a call from an attorney representing a group of investors that may have claims and disputes with Mr. Kelly in excess of $1 million. The company was requested to assist this new by forcing a bankruptcy liquidation of Mr. Kelly’s assets through the United States Bankruptcy court. We are currently investigating this process.

instaCare Corp. vs. Investor Relations Services Inc. (“IRS”), Summit Trading, Ltd. (“STL”)

In August of 2005, the Company filed suit in the Superior Court for the State of California (Case Number BC337976) against IRS and STL, seeking Declaratory Relief and rescission of the alleged December 2004 agreements between the Company and IRS/STL. The complaint also sought damages for Intentional Interference with an Advantageous Business Relationship as a result of actions taken by IRS/STL.

On January 17, 2007, the Superior Court for the State of California in Los Angeles County rendered its tentative decision against Investors Relations Services and Summit Trading, Ltd., finding that the December 2004 agreements were never submitted to the Board of Directors, were never approved or authorized by the Board of Directors, and that the Company has no obligations to either IRS or STL. In March 2007, the Company filed a motion with the Superior Court for the State of California for reimbursement of attorney’s fees and costs. We continue to pursue collection avenues.

Item 1A. Risk Factors.

Risks Relating To Our Business and Marketplace

Our limited operating history could delay our growth and result in the loss of your investment.

We were incorporated on March 2, 2001 and have previously been in the development stage and thus have had a limited operating history on which to base an evaluation of our business and prospects. Beginning in 2005, we have commenced operations and are no longer considered to be in the development stage. However, our prospects must be considered in light of the risks, expenses and difficulties frequently encountered by companies in their early stage of development. Such risks include, but are not limited to, dependence on the growth of use of electronic medical information and services, the adoption of PDA based Internet appliances for the transmission and display of medical information, the need to establish our brand name, the ability to establish a sufficient client base, the level of use of medical providers and the management of growth. To address these risks, we must maintain and increase our customer base, implement and successfully execute our business and marketing strategy, continue to develop and improve our point of care software and patient processing system, provide superior customer service, respond to competitive developments and attract, retain, and motivate qualified personnel. There can be no assurance that we will be successful in addressing such risks, and the failure to do so could lead to an inability to meet our financial obligations and therefore result in bankruptcy and the loss of your entire investment in our common shares.

We have historically lost money and losses are expected to continue in the near future, which means that we may not be able to continue operations unless we obtain additional funding.

We have historically lost money. We had an accumulated deficit as of September 30, 2008, and December 31, 2007 of $19,865,091 and $19,709,747, respectively. In addition, our development activities since inception have been financially sustained by capital contributions. Future losses are likely to occur. Accordingly, we may experience significant liquidity and cash flow problems if we are not able to raise additional capital as needed and on acceptable terms. Thus, from time to time we might need to turn to the capital markets to obtain additional financing to fund payment of obligations and to provide working capital for operations. No assurances can be given that we will be successful in reaching or maintaining profitable operations.

We have been dependent on a small number of major customers to support our prescription drug distribution plan and to refer direct to patient business.

In fiscal 2007 our four largest customers accounted for approximately 98% of our net sales and in the first nine months of 2008 these four customers accounted for approximately 92% of our net sales. We expect that a small but growing number of customers will continue to account for a substantial majority of our sales and that the relative dollar amount and mix of products sold to these customers can change significantly from year to year and how we are paid for business generated, assigned and referred by these customers can change as well. There can be no assurance that our major customers will continue to purchase products or refer business to us at current levels, or that the mix of products purchased will be in the same ratio. The loss of our largest customers, who not only buy product directly, but also refer substantial “direct to patient” business upon which we accept assignment or may provide direct billing and collection services or accept medical assignment for “direct to patient” business, or a decrease in product sales would have a material adverse effect on our business and financial condition.

Our internal controls may be inadequate, which could cause our financial reporting to be unreliable and lead to misinformation being disseminated to the public.

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. As defined in Exchange Act Rule 13a-15(f), internal control over financial reporting is a process designed by, or under the supervision of, the principal executive and principal financial officer and effected by the board of directors, management and other personnel, 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 and includes those policies and procedures that: (i) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company, and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.

We have one individual performing the functions of all officers and directors. This individual is responsible for monitoring and ensuring compliance with our internal control procedures. As a result, our internal controls may be inadequate or ineffective, which could cause our financial reporting to be unreliable and lead to misinformation being disseminated to the public. Investors relying upon this misinformation may make an uninformed investment decision.

We may not be able to retain our key personnel or attract additional personnel, which could affect our ability to generate revenue sufficient to continue as a going concern diminishing your return on investment.

Our performance is substantially dependent on the services and on the performance of our Management. instaCare is, and will be, heavily dependent on the skill, acumen and services of our CFO, Secretary and Treasurer, Keith Berman and our Chairman Robert Jagunich. Our performance also depends on our ability to attract, hire, retain and motivate our officers and key employees. The loss of the services of our executives could result in lost revenue depending on the length of time and effort required to find a qualified replacement. We have not entered into long-term employment agreements with our key personnel and currently have no "Key Employee" life insurance policies.

Our future success may also depend on our ability to identify, attract, hire, train, retain and motivate other highly skilled technical, managerial, marketing and customer service personnel. Competition for such personnel is intense, and there can be no assurance that we will be able to successfully attract, assimilate or retain sufficiently qualified personnel. If we are unable to attract, retain, and train the necessary technical, managerial, marketing and customer service personnel, our expectations of increasing our clientele could be hindered, and the profitability of instaCare reduced.

Achieving market acceptance of new or newly integrated products and services is likely to require significant efforts and expenditures.

Achieving market acceptance for new or newly integrated products and services is likely to require substantial marketing efforts and expenditure of significant funds to create awareness and demand by participants in the healthcare industry. In addition, deployment of new or newly integrated products and services may require the use of additional resources for training our existing sales and customer service personnel and for hiring and training additional salespersons and customer service personnel. There can be no assurance that the revenue opportunities from new or newly integrated products and services will justify amounts spent for their development, marketing and rollout.

We could be subject to breach of warranty claims if our software products, information technology systems or transmission systems contain errors, experience failures or do not meet customer expectations.

We could face breach of warranty or other claims or additional development costs if the software and systems we sell or license to customers or use to provide services contain undetected errors, experience failures, do not perform in accordance with their documentation, or do not meet the expectations that our customers have for them. Undetected errors in the software and systems we provide or those we use to provide services could cause serious problems for which our customers may seek compensation from us. We attempt to limit, by contract, our liability for damages arising from negligence, errors or mistakes. However, contractual limitations on liability may not be enforceable in certain circumstances or may otherwise not provide sufficient protection to us from liability for damages.

If our systems or the Internet experience security breaches or are otherwise perceived to be insecure, we could lose existing clients and limit our ability to attract new clients.

A security breach could damage our reputation or result in liability. We retain and transmit confidential information, including patient health information. Despite the implementation of security measures, our infrastructure or other systems that we interface with, including the Internet, may be vulnerable to physical break-ins, hackers, improper employee or contractor access, computer viruses, programming errors, attacks by third parties or similar disruptive problems. Any compromise of our security, whether as a result of our own systems or systems that they interface with, could reduce demand for our services.

We do not have the financial resources to litigate actions involving our copyrights or patent applications.

We have applied to receive patent rights, and trademarks relating to our software. However, patent and intellectual property legal issues for software programs, such as our products, are complex and currently evolving. Patent applications are secret until patents are issued in the United States, or published in other countries, therefore, we cannot be sure that we are first to file any patent application for our technologies, primarily the technology that allows for the safe, secure and near seamless transmission of sensitive medical information from the point of care, directly to our mail order pharmacy. Should any of our patent claims be compromised or if, for example, one of our competitors has filed or obtained a patent before our claims have been prosecuted, or should a competitor with more resources desire to litigate and force us to defend or prosecute any patent rights, our ability to develop the market for our mail order pharmacy could be severely compromised, for we do not have the financial resources to litigate actions involving our patents and copyrights.

Our auditors have expressed substantial doubt as to our ability to continue as a going concern.

Due to our increasing deficit and our lack of revenue sufficient to support existing operations, there is substantial doubt about our ability to continue as a going concern. We may need to obtain additional financing in the event that we are unable to realize sufficient revenue. We may incur additional indebtedness from time to time to finance acquisitions, provide for working capital or capital expenditures or for other purposes There can be no assurance that we will have funds sufficient to continue operations, and the failure to do so could lead to an inability to meet our financial obligations and therefore result in bankruptcy and the loss of your entire investment in instaCare's common shares.

Risks Relating To Our Common Stock

If we fail to remain current on our reporting requirements, we could be removed from the OTC Bulletin Board, which would limit the ability of broker-dealers to sell our securities and the ability of stockholders to sell their securities in the secondary market.

Companies trading on the OTC Bulletin Board, such as us, generally must be reporting issuers under Section 12 of the Securities Exchange Act of 1934, as amended, and must be current in their reports under Section 13, in order to maintain price quotation privileges on the OTC Bulletin Board. More specifically, NASD has enacted Rule 6530, which determines eligibility of issuers quoted on the OTC Bulletin Board by requiring an issuer to be current in its filings with the Commission. Pursuant to Rule 6530(e), if we file our reports late with the Commission three times in a two-year period or our securities are removed from the OTC Bulletin Board for failure to timely file twice in a two-year period then we will be ineligible for quotation on the OTC Bulletin Board. We filed our Form 10-QSB for the period ended September 30, 2006 late, therefore, two more late filings will result in de-quotation from the OTC Bulletin Board. As a result, the market liquidity for our securities could be severely adversely affected by limiting the ability of broker-dealers to sell our securities and the ability of stockholders to sell their securities in the secondary market.

Because our common stock is deemed a low-priced “Penny” stock, an investment in our common stock should be considered high risk and subject to marketability restrictions.

Since our common stock is a penny stock, as defined in Rule 3a51-1 under the Securities Exchange Act, it will be more difficult for investors to liquidate their investment even if and when a market develops for the common stock. Until the trading price of the common stock rises above $5.00 per share, if ever, trading in the common stock is subject to the penny stock rules of the Securities Exchange Act specified in rules 15g-1 through 15g-10. Those rules require broker-dealers, before effecting transactions in any penny stock, to:

Deliver to the customer, and obtain a written receipt for, a disclosure document;

Disclose certain price information about the stock;

Disclose the amount of compensation received by the broker-dealer or any associated person of the broker-dealer;

Send monthly statements to customers with market and price information about the penny stock; and

In some circumstances, approve the purchaser’s account under certain standards and deliver written statements to the customer with information specified in the rules.

Consequently, the penny stock rules may restrict the ability or willingness of broker-dealers to sell the common stock and may affect the ability of holders to sell their common stock in the secondary market and the price at which such holders can sell any such securities. These additional procedures could also limit our ability to raise additional capital in the future.

Recent and possible future issuances of common stock will have a dilutive affect on existing shareholders.

instaCare is authorized to issue up to 1,750,000,000 Shares of common stock. As of November 14, 2008, there were 43,112,335 shares of common stock issued and outstanding. Additional issuances of common stock may be required to raise capital, to acquire stock or assets of other companies, to compensate employees or to undertake other activities without stockholder approval. These additional issuances of common stock will increase outstanding shares and further dilute stockholders' interests. Because our common stock is subject to the existing rules on penny stocks and thinly traded, a large sale of stock, such as the shares we seek to have registered via this registration statement, may result in a large drop in the market price of our securities and substantially reduce the value of your investment.

Our common stock has been relatively thinly traded, may experience high price volatility and we cannot predict the extent to which a trading market will develop.

Our common stock has traded on the Over-the-Counter Bulletin Board. Our common stock is thinly traded compared to larger more widely known companies in our industry. Thinly traded common stock can be more volatile than common stock trading in an active public market. We cannot predict the extent to which an active public market for the common stock will develop or be sustained after this offering.

FINRA sales practice requirements may also limit a stockholder's ability to buy and sell our stock.

In addition to the “penny stock” rules described above, FINRA has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer's financial status, tax status, investment objectives and other information. Under interpretations of these rules, the FINRA believes that there is a high probability that speculative low priced securities will not be suitable for at least some customers. The FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit your ability to buy and sell our stock and have an adverse effect on the market for our shares.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

On July 9, 2008, we issued 725,720 shares of our restricted common stock to Centurion Credit Resources as financing fees in connection with our line of credit. We believe that the issuance of the shares was exempt from the registration and prospectus delivery requirements of the Securities Act of 1933 by virtue of Section 4(2). The recipient of the shares was afforded an opportunity for effective access to files and records of the Company that contained the relevant information needed to make its investment decision, including the Company’s financial statements and 34 Act reports. We reasonably believe that the recipient, immediately prior to issuing the shares, had such knowledge and experience in our financial and business matters that it was capable of evaluating the merits and risks of its investment. The recipient had the opportunity to speak with our president and directors on several occasions prior to its investment decision.

On July 9, 2008, we issued 450,000 shares each of our restricted common stock to two of our officers for services to the Company. We believe that the issuance of the shares was exempt from the registration and prospectus delivery requirements of the Securities Act of 1933 by virtue of Section 4(2). The recipient of the shares was afforded an opportunity for effective access to files and records of the Company that contained the relevant information needed to make its investment decision, including the Company’s financial statements and 34 Act reports. We reasonably believe that the recipient, immediately prior to issuing the shares, had such knowledge and experience in our financial and business matters that it was capable of evaluating the merits and risks of its investment. The recipient had the opportunity to speak with our president and directors on several occasions prior to its investment decision.

On August 1, 2008, we issued 2,512 shares of our restricted common stock to Centurion Credit Resources as financing fees in connection with our line of credit. We believe that the issuance of the shares was exempt from the registration and prospectus delivery requirements of the Securities Act of 1933 by virtue of Section 4(2). The recipient of the shares was afforded an opportunity for effective access to files and records of the Company that contained the relevant information needed to make its investment decision, including the Company’s financial statements and 34 Act reports. We reasonably believe that the recipient, immediately prior to issuing the shares, had such knowledge and experience in our financial and business matters that it was capable of evaluating the merits and risks of its investment. The recipient had the opportunity to speak with our president and directors on several occasions prior to its investment decision.

On September 2, 2008, we issued 350,000 shares each of our restricted common stock to two of our officers for services to the Company. We believe that the issuance of the shares was exempt from the registration and prospectus delivery requirements of the Securities Act of 1933 by virtue of Section 4(2). The recipient of the shares was afforded an opportunity for effective access to files and records of the Company that contained the relevant information needed to make its investment decision, including the Company’s financial statements and 34 Act reports. We reasonably believe that the recipient, immediately prior to issuing the shares, had such knowledge and experience in our financial and business matters that it was capable of evaluating the merits and risks of its investment. The recipient had the opportunity to speak with our president and directors on several occasions prior to its investment decision.

On September 2, 2008, we issued 822,052 shares of our restricted common stock to Centurion Credit Resources as financing fees in connection with our line of credit. We believe that the issuance of the shares was exempt from the registration and prospectus delivery requirements of the Securities Act of 1933 by virtue of Section 4(2). The recipient of the shares was afforded an opportunity for effective access to files and records of the Company that contained the relevant information needed to make its investment decision, including the Company’s financial statements and 34 Act reports. We reasonably believe that the recipient, immediately prior to issuing the shares, had such knowledge and experience in our financial and business matters that it was capable of evaluating the merits and risks of its investment. The recipient had the opportunity to speak with our president and directors on several occasions prior to its investment decision.

On September 30, 2008, we authorized the issuance 944,029 shares of our restricted common stock to Centurion Credit Resources as financing fees in connection with our line of credit. We believe that the issuance of the shares was exempt from the registration and prospectus delivery requirements of the Securities Act of 1933 by virtue of Section 4(2). The recipient of the shares was afforded an opportunity for effective access to files and records of the Company that contained the relevant information needed to make its investment decision, including the Company’s financial statements and 34 Act reports. We reasonably believe that the recipient, immediately prior to issuing the shares, had such knowledge and experience in our financial and business matters that it was capable of evaluating the merits and risks of its investment. The recipient had the opportunity to speak with our president and directors on several occasions prior to its investment decision.

Subsequent issuances

None.

Issuer Purchases of Equity Securities

We did not repurchase any of our equity securities during the quarter ended September 30, 2008.

Item 3. Defaults Upon Senior Securities.

None

Item 4. Submission of Matters to a Vote of Security Holders.

We did not submit any matters to a vote of our security holders during the third quarter of 2008.

Item 5. Other Information.

None.

Item 6. Exhibits.

Incorporated by reference

Exhibit

number

Exhibit description

Filed

herewith

Form

Period

ending

Exhibit No.

Filing

date

3(i)(a)

Articles of Incorporation – Filed March 2, 2001

10-SB

9/27/01

3(i)(b)

Articles of Amendments to Articles of Incorporation – Filed May 9, 2001

10-SB

9/27/01

3(i)(c)

Articles of Amendments to Articles of Incorporation – Filed August 2, 2002

10-QSB

6/30/02

3.1c

8/22/02

3(ii)

Bylaws of CareDecision Corporation – March 16, 2001

10-SB

9/27/01

10.31

Subscription Agreement – Mercator Momentum Fund, LP, Monarch Pointe Fund, LTD & Mercator Advisory Group, LLC – February 7, 2005

SB-2/A

10.1

2/11/05

10.32

Certificate of Designation of Preferences and Rights of Series C Convertible Preferred Stock – Mercator Momentum Fund, LP, Monarch Pointe Fund, LTD & Mercator Advisory Group, LLC – February 2005

SB-2/A

10.2

2/11/05

10.33

Registration Rights Agreement - Mercator Momentum Fund, LP, Monarch Pointe Fund, LTD & Mercator Advisory Group, LLC – February 2005

SB-2/A

10.3

2/11/05

10.34

Warrant Agreement ($0.02) - Mercator Advisory Group, LLC – February 7, 2005

SB-2/A

10.4

2/11/05

10.35

Warrant Agreement ($0.02) - Mercator Momentum Fund, LP – February 7, 2005

SB-2/A

10.5

2/11/05

10.36

Warrant Agreement ($0.02) - Monarch Pointe Fund, Ltd. – February 7, 2005

SB-2/A

10.6

2/11/05

10.37

Warrant Agreement ($0.03) - Mercator Advisory Group, LLC – February 7, 2005

SB-2/A

10.7

2/11/05

10.38

Warrant Agreement ($0.03) - Mercator Momentum Fund, LP – February 7, 2005

SB-2/A

10.8

2/11/05

10.39

Warrant Agreement ($0.03) - Monarch Pointe Fund, Ltd. – February 7, 2005

SB-2/A

10.9

2/11/05

10.40

Secured Convertible Promissory Note – Pinnacle Investment Partners, LP – March 24, 2004

SB-2/A

10.10

2/11/05

10.41

Pledge and Security Agreement – Pinnacle Investment Partners, LP – March 24, 2004

SB-2/A

10.11

2/11/05

10.42

Securities Purchase Agreement – Pinnacle Investment Partners, LP – March 24, 2004

SB-2/A

10.12

2/11/05

10.43

Note Extension Agreement – Pinnacle Investment Partners, LP – September 24, 2004

SB-2/A

10.13

2/11/05

10.44

Note Extension – Pinnacle Investment Partners, LP – February 10, 2005

SB-2/A

10.14

2/11/05

10.45

The 2004 Stock Option Plan - Amended

S-8

9/8/06

10.46

Intangible Property, License Acquisition Agreement – CN Pharmacy, Svetislav Milic, & Nathan Kaplan – June 7, 2005

8-K

10.1

10/21/05

10.47

Secured Promissory Note – Mercator Momentum Fund, LP – August 25, 2005

8-K

10.2

10/21/05

10.48

Secured Promissory Note – Monarch Pointe Fund,LTD – August 25, 2005

8-K

10.3

10/21/05

31.1

Certification of Principal Executive and Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1

Certification of Principal Executive and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

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.

instaCare Corp.

(Registrant)

By: /s/ Keith Berman

Keith Berman, Chief Financial Officer

(On behalf of the Registrant

and as Principal Financial Officer)

Date: November 14, 2008