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, 1997
                -------------------------------------------------

                           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 10, 1997 was 8,549,279 shares.


                                        1

<PAGE>



PART I - FINANCIAL INFORMATION
------------------------------

Item 1.  Financial Statements


                 INMEDICA DEVELOPMENT CORPORATION AND SUBSIDIARY
                      CONDENSED CONSOLIDATED BALANCE SHEET


                                     ASSETS



                                    September 30,
                                        1997
                                   --------------
                                     (Unaudited)

CURRENT ASSETS:
   Cash                             $    157,778
   Prepaid expenses                        3,713
                                    ------------

        Total current assets             161,491

EQUIPMENT AND FURNITURE,
   at cost, less accumulated
   depreciation of $250,634                3,855





OTHER ASSETS                               2,196


        Total assets                $    167,542
                                    ============














            See notes to condensed consolidated financial statements.


                                        2

<PAGE>




                 INMEDICA DEVELOPMENT CORPORATION AND SUBSIDIARY
                CONDENSED CONSOLIDATED BALANCE SHEET (continued)


                      LIABILITIES AND STOCKHOLDERS' DEFICIT


                                   September 30,
                                      1997
                                   ------------
                                   (Unaudited)


CURRENT LIABILITIES:
   Current portion of related-party
    note payable                    $   50,000
   Accounts payable                     14,481
   Accrued interest                        950
   Accrued payroll                         792
                                    ----------

        Total current liabilities       66,223

RELATED-PARTY NOTE PAYABLE, net of
   current portion                     120,000

STOCKHOLDERS' DEFICIT:
   Preferred stock, 10,000,000
    shares authorized; Series A
    preferred stock, cumulative
    and convertible, $4.50 par
    value; 1,000,000 shares
    designated, 25,356 shares
    outstanding                        114,102
   Common stock, $.001 par value;
    20,000,000 shares authorized,
    8,549,279 shares outstanding         8,549
   Additional paid-in
     capital                         6,628,695
   Accumulated deficit              (6,770,027)
                                    ----------
        Total stockholders'
         deficit                    (   18,681)
                                    ----------
        Total liabilities and
         stockholders' deficit      $  167,542
                                    ==========





            See notes to condensed consolidated financial statements.

                                        3

<PAGE>




                 INMEDICA DEVELOPMENT CORPORATION AND SUBSIDIARY
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

                                      For the Three            For the Nine
                                      Months Ended             Months Ended
                                      September 30,            September 30,
                                -----------------------  -----------------------
                                  1997        1996         1997        1996
                                ----------- -----------  ----------- -----------
                                (Unaudited) (Unaudited)  (Unaudited) (Unaudited)

ROYALTY REVENUES                 $ 131,520   $ 210,080    $ 239,520   $ 336,480
                                 ---------   ---------    ---------   ---------

OPERATING EXPENSES:
  General and administrative        81,867      76,734      189,582     189,148
  Research and development          46,188      21,386      121,253      86,179
                                 ---------   ---------    ---------   ---------
    Total operating expenses       128,055      98,120      310,835     275,327
                                 ---------   ---------    ---------   ---------

INCOME (LOSS) FROM OPERATIONS        3,465     111,960      (71,315)     61,153
                                 ---------   ---------    ---------   ---------

OTHER (EXPENSE) INCOME:
  Interest income                      633         489          773         519
  Interest expense                  (6,358)    (12,193)     (24,966)    (41,545)
                                    ------   ----------   ---------     -------

  Total other expense, net          (5,725)    (11,704)     (24,193)    (41,026)
                                    ------   ---------    ---------     -------

NET INCOME (LOSS)                   (2,260)    100,256      (95,508)     20,127

PREFERRED STOCK DIVIDENDS           (2,282)     (6,087)      (6,846)    (19,723)
                                 ---------   ---------    ---------   ----------

NET INCOME (LOSS) APPLICABLE
  TO COMMON SHARES               $  (4,542)  $  94,169    $(102,354)  $     404
                                 ==========  =========    =========   =========
NET INCOME (LOSS) PER
  COMMON SHARE                   $    (.00)  $     .01    $    (.01)  $     .00
                                 =========   =========    =========   =========
Weighted average number
  of common shares outstanding   8,051,772   8,560,292    8,155,138   8,560,292
                                 =========   =========    =========   =========













            See notes to condensed consolidated financial statements.

                                        4

<PAGE>




                 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, 1997  September 30, 1996
                                   ------------------  ------------------
                                        (Unaudited)       (Unaudited)

CASH FLOWS FROM OPERATING ACTIVITIES:


  Net income (loss)                     $    (95,508)       $     20,127

  Adjustments to reconcile net
    income to net cash provided
    by operating activities-
      Non-cash consulting expense                -                 6,584
      Depreciation                               873                 668
      Change in assets and liabilities-
        Decrease in royalties receivable     209,280             227,520
        Decrease in prepaid expenses          18,627              20,461
        Increase (decrease) in accounts
            payable                           14,481              (3,461)
       (Decrease) increase in
            accrued payroll                   (7,829)                573
        Decrease in interest payable          (8,262)                -
        Decrease in related-party
            payable                          (39,000)           (113,026)
                                         -----------        ------------

        Net cash provided by
            operating activities              92,662             159,446
                                         -----------        ------------

CASH FLOWS FROM INVESTING ACTIVITIES:

 Purchase of equipment and furniture             -               (31,375)
                                         ------------       ------------










            See notes to condensed consolidated financial statements.

                                        5

<PAGE>



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

                                         For the            For the
                                       Nine Months        Nine Months
                                         Ended               Ended
                                   September 30, 1997  September 30, 1996
                                   ------------------  ------------------
                                        (Unaudited)       (Unaudited)

CASH FLOWS FROM FINANCING ACTIVITIES:

  Principal payments on
    convertible debentures             $       -           $  (22,768)
  Preferred stock dividends paid            (6,846)           (19,723)
  Proceeds from issuance of common
    stock                                  146,876                -
  Principal payments on note payable      (252,500)           (37,500)
                                       -----------         ----------

          Net cash used in financing
            activities                    (112,470)           (79,991)
                                       -----------         ----------

NET (DECREASE) INCREASE IN CASH            (19,808)            48,080

CASH AT BEGINNING OF THE PERIOD            177,586            113,732
                                       -----------         ----------

CASH AT END OF THE PERIOD              $   157,778         $  161,812
                                       ===========         ==========























            See notes to condensed consolidated financial statements.

                                        6

<PAGE>





                 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, 1997
are not necessarily  indicative of the results that may be expected for the year
ending  December 31, 1997. For further  information,  refer to the  consolidated
financial  statements  included in the Company's  Form 10-KSB for the year ended
December 31, 1996.

Note B--Grant of Certain Stock Options and Research Contract

Effective  August 29, 1997, the Board of Directors  granted  options to purchase
the common stock of the Company as follows: 40,000 options to an employee, 6,000
options to a consultant  (associate with Medical  Physics) and 54,000 options to
Medical Physics, Inc. (a consulting firm). The options are exercisable for three
years at $.73 per share. The Company also granted Medical Physics,  Inc. options
to purchase an  additional  54,000  shares for $.73 per share,  exercisable  for
three years from a date (not later than May 30, 1998) on which  Medical  Physics
demonstrates  a hematocrit  measuring  device to InMedica  which  measures human
hematocrit  with an  accuracy  of plus or minus 3.5  hematocrit  points  through
ranges from 20 to 60. The options were granted in connection with a research and
development  contract  entered into with Medical  Physics,  Inc. which obligates
InMedica to pay Medical Physics, Inc. a total of $100,000 in nine equal payments
of approximately  $11,111  beginning in September 1997 and to reimburse  Medical
Physics for its  reasonable  out-of-pocket  research  and  development  expenses
(excluding  overhead)  and,  where  approved in advance by InMedica,  its travel
expenses.




                                        7

<PAGE>



NOTE C--Exercise of Certain Stock Options

Effective  September 5, 1997,  Larry E. Clark,  Chief  Executive  Officer of the
Company,  exercised  options to purchase  450,000  shares of common stock of the
Company for $.30 per share.  Following  exercise of the  options,  Mr. Clark had
direct ownership of 1,593,000 shares, or approximately 18.9% of the common stock
of the Company.  Another officer  exercised  options to purchase an aggregate of
101,667 shares for $11,876.

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,
1997, the Company  recognized royalty revenues from two payments received from J
& J Medical, Inc. totalling $239,520, a decrease of $96,960 compared to the same
period in 1996.  The decline in  revenues  was due to a decrease in sales of the
product by J & J Medical,  Inc.,  however,  the Company has no information as to
any  trend  for  future  sales.  The  Company's  revenue  recognition  policy of
recording  revenues only after the cash is assured of being received  results in
the Company  reporting  royalty revenues one quarter in arrears during the first
three  quarters of each year.  The  Company's  principal  source of liquidity 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. 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.  Consequently,  InMedica  continues  to look for  funding
sources.

     The Company received payments  totalling $146,875 from two officers for the
exercise of options to purchase common stock during  September 1997. The Company
used the proceeds to reduce  long-term debt as it is presently  funding research
and development and general and administrative expense from cash flows.

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. A net loss of $95,508 from  operations was incurred due to
a decline in royalty  revenues  received for the nine months ended September 30,
1997 compared to the  comparable  period of 1996 and an increase in research and
development  expenses  during the first nine  months of 1997.  The  increase  in
research  and  development   expenses   resulted  from  continued  work  on  the
non-invasive hematocrit project.

                                        8

<PAGE>




     PART II - OTHER INFORMATION
     ---------------------------

Item 1.  Legal Proceedings:
          None

Item 2.  Changes in Securities:
          None

Item 3.  Defaults Upon Senior Securities:
          None

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

         See  Exhibit 2 for a copy of a report on the  results of a  shareholder
         meeting held August 29, 1997.

Item 5.  Other Information:

         See Note C to the condensed consolidated financial statements regarding
         the exercise of certain stock options by the Chief Executive Officer of
         the Company.

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


     Exhibits:

(1) Hematocrit Development and Option Agreement between InMedica
     Development Corporation and Medical Physics, dated August 29,
     1997

(2) Report to Shareholders on Annual Meeting held August 29, 1997

(3) Financial Data Schedule


     Form 8-K:  None




                                        9

<PAGE>




                                   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, Chief Executive
                                             Officer


                                             /s/ Richard Bruggeman
                                             -----------------------------------
Date:  November 13, 1997                     By Richard Bruggeman, Chief
                --                           Financial Officer




                                       10

<PAGE>




                                    EXHIBITS


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


Exhibit No.      SB Item No.       Description
-----------------------------------------------

    1              (10)            Hematocrit Development  and  Option Agreement
                                   between InMedica  Development Corporation and
                                   Medical Physics, dated August 29, 1997

    2              (22)            Report  to  Shareholders on Annual Meeting of
                                   August 29, 1997

    3              (27)            Financial Data Schedule






                                       11