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, 1998
                -------------------------------------------------


                           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)


                   825 N. 300 West, Salt Lake City, Utah 84103
                   -------------------------------------------
                    (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 October 25, 1998 was 8,550,899 shares.


                                        1

<PAGE>

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

Item 1.  Financial Statements


                 INMEDICA DEVELOPMENT CORPORATION AND SUBSIDIARY
                      CONDENSED CONSOLIDATED BALANCE SHEET


                                     ASSETS



                                    September 30,
                                        1998    
                                     -----------
                                     (Unaudited)

CURRENT ASSETS:
   Cash                             $     82,607
   Prepaid expenses                        3,464
                                    ------------

        Total current assets              86,071

EQUIPMENT AND FURNITURE,
   at cost, less accumulated
   depreciation of $251,203                1,786





OTHER ASSETS                               2,196
                                    ------------


        Total assets                $     90,053
                                    ============






            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,
                                      1998   
                                   -----------
                                   (Unaudited)


CURRENT LIABILITIES:
   Note payable to related party    $  145,000
   Consulting fee payable
    to related party                    38,997
   Accrued payroll                      22,792
   Accounts payable                     20,189
                                    ----------

        Total current liabilities      226,978
                                    ----------


STOCKHOLDERS' DEFICIT:
   Common stock, $.001 par value;
    20,000,000 shares authorized,
    8,550,899 shares outstanding         8,551
   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
   Additional paid-in
     capital                         6,809,922
   Accumulated deficit              (7,069,500)
                                    ----------
        Total stockholders'
         deficit                      (136,925)
                                    ----------
        Total liabilities and
         stockholders' deficit      $   90,053
                                    ==========



            See notes to condensed consolidated financial statements.

                                        3

<PAGE>

                 INMEDICA DEVELOPMENT CORPORATION AND SUBSIDIARY
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
                                      For the Three                For the Nine
                                      Months Ended                 Months Ended
                                      September 30,                September 30,
                                      -------------                -------------
                                    1998          1997           1998         1997
                                    ----          ----           ----         ----
                                        (Unaudited)                 (Unaudited)

<S>                             <C>           <C>           <C>           <C>        
ROYALTY REVENUES                $    99,680   $   131,520   $   167,040   $   239,520
                                -----------   -----------   -----------   -----------

OPERATING EXPENSES:
  General and administrative         30,502        81,867       147,634       189,582
  Research and development           87,495        46,188       243,137       121,253
                                -----------   -----------   -----------   -----------
    Total operating expenses        117,997       128,055       390,771       310,835
                                -----------   -----------   -----------   -----------

LOSS FROM OPERATIONS                (18,317)        3,465      (223,731)      (71,315)
                                -----------   -----------   -----------   -----------

OTHER (EXPENSE) INCOME:
  Interest income                       167           633         1,150           773
  Interest expense                   (3,242)       (6,358)       (9,663)      (24,966)
                                -----------   -----------   -----------   -----------
  Total other expense, net           (3,075)       (5,725)       (8,513)      (24,193)
                                -----------   -----------   -----------   -----------

NET LOSS                            (21,392)       (2,260)     (232,244)      (95,508)
PREFERRED STOCK DIVIDENDS            (2,283)       (2,282)       (6,846)       (6,846)
                                -----------   -----------   -----------   -----------

NET LOSS APPLICABLE
  TO COMMON SHARES              $   (23,675)  $    (4,542)  $  (239,090)  $  (102,354)
                                ===========   ===========   ===========   ===========
NET LOSS PER
  COMMON SHARE (BASIC AND
  DILUTED)                      $      (.00)  $      (.00)  $      (.03)  $      (.01)
                                ===========   ===========   ===========   ===========
Weighted average number
  of common shares outstanding    8,550,899     8,051,772     8,550,899     8,155,138
                                ===========   ===========   ===========   ===========
</TABLE>



            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 Nine Months Ended
                                                        September 30,     
                                                 -------------------------
                                                1998                1997
                                                ----                ----
                                                 (Unaudited)

CASH FLOWS FROM OPERATING ACTIVITIES:


  Net loss                              $    (232,244)       $    (95,508)
  Adjustments to reconcile net
    loss to net cash provided
    by (used in) operating activities-
      Depreciation                                648                 873
      Expense related to stock options
       issued as compensation for services     77,835                  --
      Change in assets and liabilities-
        Decrease in royalties receivable       67,200             209,280
        Decrease in prepaid expenses           14,999              18,627
        Increase in consulting fees payable
         to related party                      17,332                  --
        Increase in accounts payable           19,158              14,481
        Increase (decrease) in accrued
            payroll                            15,848              (7,829)
        Decrease in interest payable           (4,752)             (8,262)
                                         -------------       ------------

        Net cash (used in) provided by
            operating activities              (23,976)            131,662
                                         -------------       ------------




            See notes to condensed consolidated financial statements.

                                        5

<PAGE>

                 INMEDICA DEVELOPMENT CORPORATION AND SUBSIDIARY
           CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

                                             For the Nine Months Ended
                                                    September 30,     
                                             -------------------------
                                           1998               1997
                                           ----               ----
                                                 (Unaudited)

CASH FLOWS FROM FINANCING ACTIVITIES:

  Proceeds from issuance of
    common stock                       $        --        $   146,876
  Preferred stock dividends paid            (6,846)            (6,846)
  Principal payments on related party
    note payable                           (25,000)           (39,000)
  Principal payments on note payable            --           (252,500)
                                       ------------        ----------

          Net cash used in financing
            activities                     (31,846)          (151,470)
                                       -----------         -----------

NET DECREASE IN CASH                       (55,822)           (19,808)

CASH AT BEGINNING OF THE PERIOD            138,429            177,586
                                       -----------         ----------

CASH AT END OF THE PERIOD              $    82,607         $  157,778
                                       ===========         ==========




            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  only of  normal
recurring  adjustments)  considered  necessary for fair  presentation  have been
included. Operating results for the three and nine-month periods ended September
30, 1998 are not necessarily  indicative of the results that may be expected for
the year  ending  December  31,  1998.  For  further  information,  refer to the
consolidated  financial statements included in the Company's Form 10-KSB for the
year ended December 31, 1997.

Royalties received from the J & J Medical, Inc. agreement are the Company's sole
source of revenue and the Company has been  advised that the royalty is expected
to terminate within the next year. The Company  generated a net loss of $232,244
during the  nine-month  period ended  September 30, 1998 and as of September 30,
1998, the Company had an accumulated  deficit of  $7,069,500.  These  conditions
raise  substantial  doubt as to the  Company's  ability to  continue  as a going
concern.  The  Company's  continued  existence is dependent  upon its ability to
achieve a viable operating plan.

NOTE B - OUTSTANDING OPTIONS

At September 30, 1998 there were outstanding  options to purchase 682,500 shares
of common stock which were not included in the  computation  of diluted net loss
per common share because they would be antidilutive.

NOTE C- AGREEMENT TO ISSUE STOCK FOR SERVICES

The Company has agreed  effective  October  29,  1998 to issue an  aggregate  of
70,000  shares of  restricted  common  stock valued at $.60 per share as partial
compensation for services rendered during the months of June through  September,
1998 by researchers working on the hematocrit project.


                                        7

<PAGE>



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

Liquidity and Capital Resources
-------------------------------

     Total  revenues for the nine months ended  September 30, 1998 were $167,040
or $72,480  less than the same  period of the prior  year.  The  Company's  sole
source of revenue is royalties received from J & J Medical, Inc. ("JJMI").  JJMI
recently  advised the Company  informally that royalty  revenues are expected to
continue  for  less  than  one  year  because  the  product  line  incorporating
InMedica's  technology  is being phased out by JJMI.  At present,  royalties are
paid to the Company on a quarterly basis. Royalty revenues being received by the
Company  are  insufficient  to sustain  research  and  development  costs,  fund
operations  and retire  indebtedness  when it comes due.  InMedica  consequently
continues to look for funding sources.

     The royalty agreement with JJMI has been pledged to secure repayment of the
$145,000 note payable to the Company's Chief Executive Officer.  The note is due
on or before June 22, 1999. The Company is paying quarterly interest payments on
the note.  InMedica continues to look for funding sources to retire the note but
has no  commitments.  Research  and  development  expenditures  on the  proposed
hematocrit device have been expensed as incurred.  The ability of the Company to
use the  proposed  device as a means of  securing  funding  for the  Company  is
totally  dependent upon the success of further research and development  efforts
in producing a viable device suitable for commercialization.

Results of Operations
---------------------

     The net loss of  $232,244  for the  nine-months  ended  September  30, 1998
increased  by $136,736  compared to the same period of the prior year as royalty
revenues declined by $72,480 and research and development  expenses increased by
$121,884  compared to the prior year.  The increase in research and  development
expenses was due to payments  made under a hematocrit  research and  development
contract with Medical Physics and to an employee, and the expense of issuance of
certain options relating to research and development.  Interest expense declined
for the period ended September 30, 1998 when compared to the same period in 1997
due to a substantial  reduction in the principal amount of the note owing to the
Company's Chief Executive Officer in September, 1997. General and administrative
expenses  decreased due to reduction in office  overhead and payments to service
providers.

     The Company does not expect that its operations  will be directly  affected
by the Year 2000 issue  ("Y2K").  The Company is unable to forecast any indirect
effect of computer or other device  malfunction  related to Y2K on the Company's
results of operations.


                                        8

<PAGE>

The Company  contacted  JJMI and was assured by JJMI that it is aware of the Y2K
issue and is acting responsibly to avoid any adverse impact on JJMI's ability to
conduct its operations which presently generate royalty revenue for the Company.


     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:
         None

Item 5.  Other Information:
         None

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


     Exhibits:

(1) 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:  October 28, 1998                       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              (27)         Financial Data Schedule






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