U.S. SECURITIES AND EXCHANGE COMMISSION


                             Washington, D.C. 20549


                                  Form 10 - QSB


                   Quarterly Report Under Section 13 or 15 (d)
                     of the Securities Exchange Act of 1934

                For the Quarterly Period Ended September 30, 1996


                           Commission File No. 0-12968


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



            Utah                                             87-0397815
(State or other jurisdiction of                  (I.R.S. Employer Identification
 incorporation of organization)                   Number)


                  60 South 600 East, Suite 150, Salt Lake City
               Utah 84102 (Address of principal executive offices)

        Registrant's telephone number including area code (801) 521-9300



Check  whether the issuer (1) filed all reports  required to be filed by section
13 or 15(d) of the 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   X    No


The number of shares outstanding of the registrant's only class of common stock,
par value $.001 per share, as of November 1, 1996 was 7,745,570 shares.


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PART I - FINANCIAL INFORMATION                         Page 1 of 2
------------------------------

Item 1.  Financial Statements


                 INMEDICA DEVELOPMENT CORPORATION AND SUBSIDIARY

                      CONDENSED CONSOLIDATED BALANCE SHEET
                            AS OF SEPTEMBER 30, 1996


                                     ASSETS



                                    September 30,
                                        1996
                                     (Unaudited)

CURRENT ASSETS:
   Cash                             $    161,812
   Prepaid expenses                        6,255
                                    ------------

        Total current assets             168,067

EQUIPMENT AND FURNITURE,
   at cost, less accumulated
   depreciation of $249,713               34,777





OTHER ASSETS                               2,196


        Total assets                $    205,040
                                    ============












            See notes to condensed consolidated financial statements.


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                                                       Page 2 of 2

                 INMEDICA DEVELOPMENT CORPORATION AND SUBSIDIARY
                      CONDENSED CONSOLIDATED BALANCE SHEET
                            AS OF SEPTEMBER 30, 1996


                      LIABILITIES AND STOCKHOLDERS' DEFICIT


                                  September 30,
                                      1996
                                   (Unaudited)


CURRENT LIABILITIES:
   Current portion of note
     payable                        $   50,000
   Accounts payable and
     accrued interest                   12,072
   Related party notes
     payable                            25,500

        Total current liabilities       87,572

NOTE PAYABLE, less
   current portion                     385,000

STOCKHOLDERS' DEFICIT:
   Common stock, $.001 par value;
    20,000,000 shares authorized,
    7,745,570 shares outstanding         7,746
   Preferred stock,  10,000,000
    shares  authorized;  Series A 
    preferred  stock, cumulative 
    and convertible,  $4.50 par
    value,  1,000,000 shares
    designated, 67,633 shares
    outstanding                        304,349
   Additional paid-in
     capital                         6,225,018

   Accumulated deficit              (6,804,645)

        Total stockholders'
         deficit                    (  267,532)

        Total liabilities and
         stockholders' deficit      $  205,040
                                    ==========

            See notes to condensed consolidated financial statements.

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                 INMEDICA DEVELOPMENT CORPORATION AND SUBSIDIARY
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

                                    For the Three            For the Nine
                                     Months Ended             Months Ended
                                    September 30,            September 30,
                                  1996        1995         1996        1995
                               (Unaudited) (Unaudited)  (Unaudited) (Unaudited)
ROYALTIES                      $   210,080     179,840  $   336,480 $   321,054
                               ----------- -----------  ----------- -----------

OPERATING EXPENSES:
  General and
   administrative                   76,734      64,761      189,148    164,642
  Research and
   development                      21,386          -0-      86,179         -0-
                               -----------  ----------   ---------- ----------

    Total operating expenses        98,120      64,761      275,327    164,642
                               ----------- -----------  ----------- ----------

INCOME FROM OPERATIONS             111,960     115,079       61,153    156,412
                               ----------- -----------  ----------- ----------

OTHER (EXPENSE) INCOME:
  Interest and other income            489          16          519         16
  Gain from sale of assets              -0-      5,728           -0-     5,728
  Interest expense                 (12,193)    (38,311)     (41,545)  (119,521)
                               ------------ ----------  -----------   --------

  Total other expense, net        (11,704)     (32,567)     (41,026)  (113,777)
                               ----------   ----------  -----------   --------

INCOME BEFORE
  EXTRAORDINARY GAIN              109,256       82,512       20,127     42,635

EXTRAORDINARY GAIN FROM
  DEBT EXTINGUISHMENT                  -0-      19,723           -0-   188,770
                               ----------- -----------  ---------- -----------

NET INCOME                         101,256     102,235       20,127    231,405
                               ----------- -----------  -----------  ---------

Less preferred
  stock dividends                   (6,087)         -0-     (19,723)        -0-
                               ----------- -----------     ---------  --------
NET INCOME APPLICABLE
  TO COMMON SHARES             $    94,169   $ 102,235   $      404  $ 231,405
                                ===========   =========   ==========  ========
NET INCOME PER
  COMMON SHARE:
Income before
 extraordinary gain            $       .01 $       .01  $       .00  $     .01
Extraordinary gain                     .00         .00          .00        .02
                               ----------- -----------   ----------  ---------
Net income per common share    $       .01 $       .01  $       .00  $     .03
                               =========== ===========   ==========  =========
Weighted average number
  of common shares outstanding   8,560,292   7,475,919    8,560,292  7,475,919
                               =========== ===========  ===========  ===========
            See notes to condensed consolidated financial statements.

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                                                       Page 1 of 2


                 INMEDICA DEVELOPMENT CORPORATION AND SUBSIDIARY
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

                           INCREASE (DECREASE) IN CASH

                                         For the            For the
                                       Nine Months        Nine Months
                                         Ended               Ended
                                   September 30, 1996  September 30, 1995
                                        (Unaudited)       (Unaudited)

CASH FLOWS FROM OPERATING ACTIVITIES:


  Net income                            $    20,127     $    231,405
  Adjustments to reconcile net
    income to net cash provided
    by operating activities-
      Non-cash consulting expense             6,584
      Depreciation                              668           24,517
      Extraordinary gain from debt
       extinguishment                            -0-        (188,770)
      Gain from sale of assets                   -0-          (5,728)
      Change in assets and liabilities-
        Decrease in royalties receivable    227,520          301,375
        Decrease in prepaid expenses         20,461           20,024
        Decrease in accounts payable         (3,461)          (6,961)
        Increase (decrease) in
         accrued liabilities                    573         (148,866)
        Decrease in related party payable  (113,026)              -0-

          Net cash provided by
           operating activities              159,446         226,996
                                         -----------     -----------

CASH FLOWS FROM INVESTING ACTIVITIES:

  Proceeds from sale of assets                  -0-            6,200
  Purchase of equipment and furniture       (31,375)          (3,466)

         Net cash (used in) provided
           by investing activities          (31,375)           2,734
                                          ------------        -------

            See notes to condensed consolidated financial statements.

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                                                              Page 2 of 2
                 INMEDICA DEVELOPMENT CORPORATION AND SUBSIDIARY
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                           INCREASE (DECREASE) IN CASH

                                         For the            For the
                                       Nine Months        Nine Months
                                         Ended               Ended
                                   September 30, 1996  September 30, 1995
                                        (Unaudited)       (Unaudited)

CASH FLOWS FROM FINANCING ACTIVITIES:

  Principal payments on
    convertible debentures              $   (22,768)   $   (233,453)
  Preferred stock dividends paid            (19,723)             -0-
  Principal payments on note payable        (37,500)             -0-
  Proceeds from bank loan                        -0-        150,000
  Proceeds from issuance of common stock         -0-            338
          Net cash used in financing
            activities                      (79,991)        (83,115)
                                         ----------        ---------



NET INCREASE IN CASH                         48,080         146,615

CASH AT BEGINNING OF PERIOD                 113,732           3,080
                                          ---------        --------

CASH AT END OF PERIOD                     $ 161,812        $149,695
                                          =========        ========









            See notes to condensed consolidated financial statements.


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                 INMEDICA DEVELOPMENT CORPORATION AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Note A--Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial  information and with the instructions to Form 10-QSB and Item 310b of
Regulation  SB.  Accordingly,  they do not  include all of the  information  and
footnotes  required by generally  accepted  accounting  principles  for complete
financial  statements.  These  consolidated  statements  include the accounts of
InMedica Development Corporation and its wholly owned subsidiary, MicroCor, Inc.
("MicroCor").  All material  intercompany  accounts and  transactions  have been
eliminated.

In the opinion of management,  all adjustments  (consisting of normal  recurring
adjustments)  considered  necessary for fair  presentation  have been  included.
Operating  results for the three and nine month periods ended September 30, 1996
are not necessarily  indicative of the results that may be expected for the year
ending  December 31, 1996. For further  information,  refer to the  consolidated
financial  statements  included in the Company's  Form 10-KSB for the year ended
December 31, 1995.

Note B--Reduction and Grant of Certain Stock Options

     During the period  October 1995  through  April 1996,  the Company  granted
stock  options to officers,  directors  and  consultants  aggregating  1,100,000
shares. At a board meeting held July 31, 1996, the Company reduced these options
by 25%  effective  August 1,  1996,  reducing  the  total  options  granted  and
outstanding to 825,000.

     Effective September 3, 1996, the Company entered into a consulting contract
with Ruben Engineering,  Paul Ruben and Calvin Ruben for engineering  consulting
services relating to the development of the Company's hematocrit technology. The
contract  grants the Rubens options to purchase a total of 300,000 shares of the
common  stock of the  Company  for $1.16 per share.  A block of 200,000  options
become  exercisable and vest 25,000 per quarter  beginning  December 1, 1996. An
additional 100,000 options become exercisable and non-forfeitable  only upon the
date  satisfactory  clinical  trials  have  been  completed  on  the  hematocrit
technology.  All options are immediately  exercisable and non-forfeitable if the
FDA  approves  the  Company's  hematocrit  technology  or if InMedica is sold or
acquired or the  non-invasive  hematocrit  technology  is sold or  acquired.  In
connection  with the  granting  of these  options  the  Company  has  recognized
$178,000 of consulting expenses of which

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$171,416 has been deferred until the services have been provided.

     Effective  September 17, 1996,  Dr. Allan  Kaminsky  severed his employment
relationship  with the Company  resulting in the  cancellation of his options to
purchase 435,000 shares of the Company's common stock.

NOTE C--Extension of Preferred Stock Conversion Exercise Period

Effective  September 30, 1996, the Company extended from October 1, 1996 through
November 1, 1996,  the period  during which the  preferred  stockholders  of the
Company are entitled to convert shares of the Series A preferred stock to common
stock of the  Company  at the rate of six  shares  of common  for each  share of
preferred.

NOTE D--Subsequent Event

During  October  1996,  eight of the Company's  Series A preferred  stockholders
converted an aggregate of 42,277  shares of par value $4.50 Series A Convertible
preferred  stock to an  aggregate  of  253,662  shares  of  common  stock of the
Company.  The  conversion  rate was six shares of common stock for each share of
preferred.  The Company  presently has five  remaining  preferred  stockholders.
Total aggregate  dividends payable on the remaining  preferred stock outstanding
is $9,128 per year.

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Item 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
         CONDITION AND RESULTS OF OPERATIONS


Liquidity and Capital Resources

     During the nine months ended  September  30, 1996,  the Company  recognized
royalty revenues from two payments received from J & J Medical,  Inc.  totalling
$336,480,  up  slightly  from the same  period in 1995.  The  Company's  revenue
recognition policy of recording revenues only after the cash is received results
in the Company  reporting  royalty  revenues  one quarter in arrears  during the
first  three  quarters  of each year.  The  Company's  sole source of revenue is
royalty  payments  received  from J & J  Medical,  Inc.,  which  are paid to the
Company on a quarterly basis. Royalty revenues being received by the Company may
be insufficient to sustain research and development  costs,  fund operations and
retire indebtedness when it comes due. InMedica  consequently  continues to look
for funding sources.

     InMedica  achieved  profitable  operations  during the fiscal  years  ended
December  31,  1995 and 1994.  Profitable  operations  resulted  from  increased
royalty receipts coupled with expense  reductions and the suspension of research
and development efforts in 1994, and an extraordinary gain in 1995. However, the
Company has a total stockholders' deficit of $267,532 and an accumulated deficit
of  $6,804,645  as of September  30, 1996. In order for InMedica to continue its
research and  development  activities and meet its  obligations,  it must secure
additional  financing,  for which it has no  commitments.  It is  impossible  to
estimate the amount of the J & J Medical,  Inc.  royalties which may be received
in the future.  Such royalty  revenue is dependent upon the continued sales of a
certain  product line by J & J Medical Inc.  which  includes the Company's  base
technology upon which the royalty is paid.


Results of Operations

     See  "Liquidity  and  Capital  Resources"  for  an  explanation  as to  the
reporting of two quarters of revenue receipts during the first three quarters of
the year.  The net income  from  operations  decreased  to $20,127  for the nine
months ended  September  30, 1996  compared to $42,635 for the  comparable  nine
months  of the prior  year due to an  increase  in  general  and  administrative
expenses and research and development expenses.




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     PART II - OTHER INFORMATION

Item 1.  Legal Proceedings:
          None

Item 2.  Changes in Securities:  See  Note  C to  the  financial  statements for
          information on a change in the exercise period  for certain conversion
          rights of the preferred stockholders.

Item 3.  Defaults Upon Senior Securities:
          None

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

Item 5.  Other Information:

     During August 1996, Dr. Allan Kaminsky (a former President, Chief Executive
Officer,  Director and key employee of the Company)  orally  advised a member of
the  Company's  board of  directors  that he would no  longer  pursue  obtaining
control  of  the  Company  by  a  proxy  contest  or  litigation.  Dr.  Kaminsky
subsequently  sent a letter  dated  September  6,  1996 to Mr.  Larry  E.  Clark
offering  his  continued  efforts  on  behalf  of  the  Company,   without  cash
compensation, in exchange for certain commitments by the Company, which included
a right  exercisable  by Dr.  Kaminsky to appoint  five  persons to the Board of
Directors  (in the event he was able to  develop a device  which  could  measure
hematocrit  within certain  ranges) and rights for Dr.  Kaminsky to purchase one
million or more  shares of stock in the  Company at 50% of market  value (in the
event the Company  achieved  the ability to  fabricate a  marketable  product or
executed a  merger/acquisition).  The letter  advised  the  Company  that if Dr.
Kaminsky did not receive a reply from the Company by September  16, 1996 that he
would  "irreversibly"  sever  any  association  with  the  Company  (employment,
consulting and advisory). After considering Dr. Kaminsky's proposal, the Company
determined to make no response to the letter and considers its association  with
Dr.  Kaminsky to be terminated  and that his 435,000  options have  expired.  On
September 17, 1996, Dr. Kaminsky advised the Company that his offer to negotiate
had expired, that he had no association (employment,  consulting, advisory) with
InMedica/MicroCor,  other than being a passive  shareholder  and that his action
was  permanent  and  irreversible.  Dr.  Kaminsky  continues  to be a  principal
shareholder of the Company; see Form 10-KSB for the year ended 1995,  "Principal
Shareholders".


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Item 6.   Exhibits and reports on Form 8-K:


     Exhibits:

(1) Agreement dated September 3, 1996 between InMedica  Development  Corporation
and Paul Ruben dba Ruben Engineering and Calvin Ruben, incorporated by reference
to the Exhibits to Form 8-K dated September 20, 1996.

(2) Form of conversion agreement executed by eight Preferred stockholders during
October 1996 to convert Series A preferred to common stock of the Company.

(3)  Financial Data Schedule



     Form 8-K:

The Company filed a Form 8-K dated September 20, 1996.



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                                   SIGNATURES

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

                                INMEDICA DEVELOPMENT CORPORATION


                                /s/ Larry E. Clark
                                By Larry E. Clark, CEO


                                /s/ Richard Bruggeman
Date:  November 18, 1996        By Richard Bruggeman, Treasurer




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                                    EXHIBITS


Exhibits filed with the Form 10-QSB of InMedica Development
Corporation, SEC File No. 0-12968:


Exhibit No.      SB Item No.       Description

                  (10)          Agreement   dated   September  3,  1996  between
                                InMedica   Development   Corporation   and  Paul
                                Ruben  dba  Ruben  Engineering and Calvin Ruben,
                                incorporated  by  reference  to  the Exhibits to
                                Form 8-K dated September 20, 1996.

   1              (10)          Form of conversion agreement
                                executed by eight preferred  stockholders during
                                October  1996 to convert  Series A preferred  to
                                common stock of the Company.

   2              (27)          Financial Data Schedule






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