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 June 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 August 12, 1997 was 7,999,232 shares.

                                      1

<PAGE>



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

Item 1.  Financial Statements


                INMEDICA DEVELOPMENT CORPORATION AND SUBSIDIARY

                      CONDENSED CONSOLIDATED BALANCE SHEETS
                               AS OF JUNE 30, 1997


                                     ASSETS


                                       June 30,
                                         1997
                                     -----------
                                     (Unaudited)

CURRENT ASSETS:
   Cash                             $    181,126
   Prepaid expenses                        9,378
                                     -----------

        Total current assets             190,504

EQUIPMENT AND FURNITURE,
   at cost, less accumulated
   depreciation of $250,343                4,146





OTHER ASSETS                               2,196


        Total assets                $    196,846
                                    ============












           See notes to condensed consolidated financial statements.



                                      2

<PAGE>



                                                                     Page 2 of 2

                INMEDICA DEVELOPMENT CORPORATION AND SUBSIDIARY
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                               AS OF JUNE 30, 1997


                      LIABILITIES AND STOCKHOLDERS' DEFICIT



                                     June 30,
                                       1997
                                    ----------
                                    (Unaudited)


CURRENT LIABILITIES:
   Current portion of note
     payable                        $   50,000
   Accrued Interest                        850
   Accounts payable                      1,219
   Accrued payroll                         792
                                    ----------

        Total current liabilities       52,861


NOTE PAYABLE, less
   current portion                     305,000
                                    ----------

STOCKHOLDERS' DEFICIT:
   Common stock, $.001 par value;
    20,000,000 shares authorized,
    7,999,232 issued and outstanding     7,999
    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 issued
    and outstanding                    114,102
   Additional paid-in
     capital                         6,482,369
   Accumulated deficit              (6,765,485)
                                    ----------
        Total stockholders'
         deficit                    (  161,015)
                                    ----------
        Total liabilities and
         stockholders' deficit      $  196,846
                                    ==========

           See notes to condensed consolidated financial statements.

                                      3

<PAGE>



                                                                     Page 1 of 2

                 INMEDICA DEVELOPMENT CORPORATION AND SUBSIDIARY
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

                                  For the Three            For the Six
                                  Months Ended             Months Ended
                              ---------------------   -----------------------
                                    June 30,                 June 30,
                                1997        1996         1997        1996
                              ---------   ---------   ---------    ----------
                              (Unaudited)(Unaudited)  (Unaudited) (Unaudited)

ROYALTY REVENUES              $ 108,000   $ 126,400    $ 108,000   $  126,400
                              ---------     -------      -------   ----------


OPERATING EXPENSES:
  General and
   administrative                59,875      75,698      107,715      112,414
 Research and
   development                   43,382      42,764       75,065       64,793
                                 ------  ----------      -------   ----------
    Total operating expenses    103,257     118,462      182,780      177,207
                               --------  ----------      -------   ----------


LOSS FROM OPERATIONS              4,743       7,938      (74,780)     (50,807)
                                  -----      ------      -------   ----------



OTHER (EXPENSE) INCOME:
  Interest income                   134          30          140           30
   Interest expense (Note B)     (9,105)    (14,398)     (18,608)     (29,352)
                               ---------  ----------  ----------      -------
Total other expense              (8,971)    (14,368)     (18,468)     (29,322)
                              ---------  ----------  ----------      --------


NET LOSS                      $  (4,228)  $  (6,430)    $(93,248)    $(80,129)
PREFERRED STOCK DIVIDEND         (2,282)     (6,086)      (4,564)     (13,636)
                              ----------  ----------    ---------   ---------

NET LOSS APPLICABLE
  TO COMMON SHARES            $  (6,510)  $ (12,516)    $(97,812)   $ (93,756)
                              =========   =========     ========     ========
Net loss per common share     $   (.001)  $   (.002)    $  (.012)   $   (.012)
                              =========    ========       =======    ========
 Weighted average number
  of common shares
  outstanding                 7,999,232   7,686,433    7,999,232    7,586,070
                              =========   =========    =========    =========

            See notes to condensed consolidated financial statements.

                                        4

<PAGE>



                                                                     Page 1 of 2


                 INMEDICA DEVELOPMENT CORPORATION AND SUBSIDIARY
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

                           INCREASE (DECREASE) IN CASH

                                          For the           For the
                                        Six Months        Six Months
                                           Ended             Ended
                                      June 30, 1997     June 30, 1996
                                      -------------     -------------
                                        (Unaudited)       (Unaudited)

CASH FLOWS FROM OPERATING ACTIVITIES:

  Net loss                               $  (93,248)    $   (80,129)
  Adjustments to reconcile net
    loss to net cash provided
    by operating activities-
      Depreciation                              582             445
      Change in assets and liabilities-
        Decrease in royalties receivable    209,280         227,520
        Decrease in prepaid expenses         12,962          13,354
        Increase (decrease) in accounts
         payable                              1,219          (3,143)
        Increase (decrease) in accrued
         payroll                             (7,829)          3,011
        Decrease in interest payable         (8,362)              0
        Decrease in related party payable   (39,000)        (51,000)
                                           ---------    ------------

          Net cash provided by
           operating activities              75,604         110,058
                                           --------     -----------

CASH FLOWS FROM INVESTING ACTIVITIES:

    Purchase of equipment and furniture           0          (1,375)
                                           ----------   -----------

    Net cash used in investing
     activities                                   0          (1,375)
                                           ----------   -----------


            See notes to condensed consolidated financial statements.

                                        5

<PAGE>



                                                                     Page 2 of 2

                 INMEDICA DEVELOPMENT CORPORATION AND SUBSIDIARY
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS



                                      For the            For the
                                    Six Months         Six Months
                                       Ended              Ended
                                   June 30, 1997      June 30, 1996
                                   -------------      -------------
                                    (Unaudited)        (Unaudited)



CASH FLOWS FROM FINANCING ACTIVITIES:

  Principal payments on
    convertible debentures                   0           $ (22,768)
  Preferred stock dividends paid        (4,564)            (13,636)
  Principal payments on note payable   (67,500)            (25,000)
                                      ---------          ---------


          Net cash used in
            financing activities       (72,064)            (61,404)



NET INCREASE IN CASH                $    3,540              47,279
 
CASH AT BEGINNING OF PERIOD            177,586             113,732
                                     ---------          ----------

CASH AT END OF PERIOD                  181,126          $  161,011
                                    ==========          ==========











           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 six month  periods  ended June 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--Effective  June 23, 1997,  the Company  entered  into a revolving  loan
arrangement  with its Chief Executive  Officer,  Larry E. Clark,  with a maximum
loan  amount of  $450,000,  evidenced  by a Line of Credit Loan  Agreement  (the
"Agreement").  Loans  pursuant  to the  Agreement  are to be upon terms not less
favorable  than  the  terms  of a loan  obtained  by Mr.  Clark  from  Bank  One
concurrently  with the loan made to the Company;  an initial advance was made to
the Company by Mr. Clark pursuant to the Agreement of $350,000.  The proceeds of
the $350,000 loan from Mr. Clark were used to retire the outstanding debt of the
Company owing to Wells Fargo Bank (formerly First Interstate Bank) and to obtain
a release of all Collateral securing the debt, including the J & J Medical, Inc.
royalty  contract dated June 15, 1995 and collateral  which had been supplied by
Mr. Clark. The Company then granted to Mr. Clark a security  interest in the J &
J Medical, Inc. royalty agreement as security for repayment of the loan from Mr.
Clark.  The interest rate pursuant to the Agreement  with Mr. Clark is less than
that previously paid by the Company on the Wells Fargo loan.



                                      7

<PAGE>




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


Liquidity and Capital Resources

     For the three  months  ended March 31, 1997,  no  operating  revenues  were
recognized due to the revenue  recognition  policy of the Company and the timing
of the receipt of revenues.  Total revenues for the first six months of the year
were $108,000 or $18,400 less than during the same period of the prior year. The
Company's  sole  source of  revenue  is a royalty  payment  received  from J & J
Medical,  Inc.,  which is 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, 1996, 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  $(161,015)  and an  accumulated
deficit of  $(6,765,485)  as of June 30, 1997. 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 income is dependent upon the continued sales of the
product line by J & J Medical Inc. which includes the Company's base  technology
and upon which the royalty is paid.


Results of Operations

     See "Liquidity and Capital  Resources" for an explanation as to the lack of
revenues  during the quarter ended March 31, 1997. The net loss from  operations
of $93,248 for the six months ended June 30, 1997 increased by $13,123  compared
to the comparable  period of the prior year primarily  because royalty  revenues
declined by $18,400 compared to the prior year.





                                      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:
            None

Item 5.     Other Information: See Note B to the financial statements
            for information as to a revolving loan agreement with the
            Company's President.

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

            Exhibits:  (1) Loan Agreement between Larry E. Clark and
            the InMedica Development Corporation dated June 23, 1997

            (2)  Financial Data Schedule

                                      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, Chairman


                                                /s/ Richard Bruggeman
                                                --------------------------------
Date:  August 13, 1997                          By Richard Bruggeman, Treasurer
              --




                                      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)          Loan Agreement between Larry E.
                                Clark and InMedica Development
                                Corporation dated June 23, 1997.

   2              (27)          Financial Data Schedule






                                      11

<PAGE>



                                                                       Exhibit 1
                          LINE OF CREDIT LOAN AGREEMENT
                             AND SECURITY AGREEMENT

    In consideration of the covenants and conditions hereafter contained,  Larry
E. Clark (hereafter  "Clark") and InMedica  Development  Corporation  (hereafter
"Borrower") agree as follows:

     1.  REPRESENTATIONS. Clark desires to lend to Borrower, on a revolving line
of credit  basis,  the  amount set forth as the Line of Credit  Limit  above the
signatures  to this  Agreement,  pursuant  to the terms and  conditions  of this
Agreement ("Agreement" or "Line of Credit").

     2. LINE OF CREDIT LIMIT. Clark shall not be required to advance to Borrower
at any one time under the  provisions  of this  Agreement an amount in excess of
the Line of Credit Limit as shown above the signatures to this Agreement, or the
Borrowing  Base,  whichever is less. The Borrowing Base shall be equal to 80% of
the Market Value of the Collateral.

     3.  TERMS OF LINE OF CREDIT.

     A. Clark agrees to lend to Borrower  from the date hereof  amounts which do
not exceed the Line of Credit Limit or the  Borrowing  Base,  whichever is less.
Borrower  agrees to repay all amounts  borrowed and advanced in accordance  with
the terms described herein. The Line of Credit Limit is the maximum amount Clark
is required to advance to Borrower under this Agreement.

     B. The  funds  available  under  this  Agreement may not be obtained by any
person or entity except an authorized agent of Borrower and Clark.

     C. Borrower may obtain advances on the Line of Credit as follows: (1) Clark
will  maintain a ledger  which will reflect all  advances,  charges and payments
made on the Line of Credit.  All funds  available to Borrower under this Line of
Credit will be advanced on oral or written  demand of Borrower,  and Clark shall
not have the right to deny any such advance unless this Agreement has matured or
been terminated prior to an advance request.

(2) An initial  disbursement  from the Line of Credit in the amount of  $350,000
has been made to Borrower as of June 23, 1997.

     D.  LOAN INTEREST RATE.  Borrower  shall  pay  to  Clark  interest  on  the
outstanding  balance of all advances  obtained  under the Line of Credit,  which
shall be identical to the interest paid by Clark on a loan from Bank One used to
fund this loan to Borrower.  The interest rate shall be a variable interest rate


                                      12

<PAGE>



which at all times  shall be equal to the  "prime  rate" of  interest  for loans
charged and announced by Bank One, National Association, or its successors, (the
"Loan Index  Rate") plus the  additional  percentage  points set forth above the
signatures to this Agreement (the "Margin").  The Loan Index Rate will change on
the day  the  "prime  rate"  changes  and  the  total  interest  payable  on the
outstanding  principal  balance  will  fluctuate  with changes in the Loan Index
Rate.  Interest  shall  be  computed  daily  on the  basis of a 360 day year and
charged on the number of actual days advances are outstanding.

     E. INTEREST PAYMENTS.  Clark will notify Borrower quarterly of the interest
due for the  preceding  quarter on total  outstanding  advances from the Line of
Credit.  Interest  will be due in arrears and the  interest  due must be paid to
Clark on or before the due date of Clark's interest  payments to his lender.  If
payment is not received from Borrower on or before the due date,  Clark may, but
shall  not be  required  to  charge  the Line of  Credit  for the  amount of the
interest due for the preceding quarter so long as such charge does not cause the
outstanding principal balance to exceed the Line of Credit limit.

     F.  PRINCIPAL PAYMENTS.  Borrower shall make minimum principal  payments of
$12,500 per quarter. Until Clark declares a termination of the Line of Credit or
otherwise  notifies  Borrower  in  writing,  Borrower  may make such  additional
payments on the principal  balance of the advances  outstanding as Borrower,  in
its sole discretion, determines. There shall be no pre-payment penalty.

     G.  OTHER FEES.  Borrower  shall pay  a  reasonable fee,  including outside
attorney's fees to amend the Loan Agreement or any of the Loan Documents.

     4. SECURITY.  The security for all advances made to Borrower under the Line
of Credit and all accrued interest, costs and fees shall be as described in this
Security  Agreement or other lien  instrument  executed in connection  with this
Agreement (the "Collateral").

     5.  TERMINATION AND MATURITY.

     A.  TERMINATION BY BORROWER.  Borrower may terminate this  Agreement at any
time by furnishing Clark with a written notice that this Agreement is terminated
and coincidentally therewith paying all outstanding advances,  accrued interest,
fees and charges.

     B.  TERMINATION BY CLARK. In the event of Borrower's default, and following
notice and failure by Borrower to cure as required  herein,  Clark may terminate
his obligation to make further advances under this Agreement.


                                      13

<PAGE>



     C.  MATURITY.  Notwithstanding the foregoing,  this  Line  of  Credit shall
mature  and all  outstanding  advances,  including  accrued  interest,  fees and
charges, shall be due and payable in full June 22, 1998.

     6.  SECURITY  INTEREST.  Borrower  does  hereby  grant to Clark a  security
interest in the certain agreement dated June 15, 1995 between MicroCor,  Inc., a
wholly owned subsidiary of Borrower and Johnson & Johnson Medical,  Inc. and all
royalties  paid  pursuant  thereto,  which  may be  perfected  by filing a UCC-1
financing statement.  Clark may seek from J & J Medical, Inc. any consent of J &
J Medical,  Inc. he deems necessary to the grant of the security interest either
before or after the date of the grant of the security interest to him. Clark may
execute on the Security Interest in the event of Borrower's default.

     7.  REPRESENTATIONS AND WARRANTIES OF BORROWER.  As an  inducement to Clark
to enter in to this  Agreement to make the Line of Credit  available as provided
for herein, Borrower represents and warrants to Clark as follows:

     A.  AUTHORITY.  The execution,  delivery  and performance of this Agreement
and all other documents, instruments and agreements contemplated hereby to which
Borrower is a party,  when  executed and  delivered by Borrower,  will be legal,
valid and binding obligations of Borrower.

     B.  LITIGATION.  Except as disclosed by Borrower to Clark in  writing prior
to the date hereof,  there are no actions,  suits or proceedings (whether or not
purportedly  on behalf of  Borrower)  pending or, to the  knowledge  of Borrower
after reasonable investigation,  threatened against or affecting Borrower at law
or in equity  by any  person,  which,  if  adversely  determined,  would  have a
material  adverse effect on the business,  properties or financial  condition of
Borrower.

     8.  AFFIRMATIVE COVENANTS OF BORROWER.  Until payment is full of Borrower's
obligations hereunder and the termination of Clark's commitment to make the Line
of Credit available, Borrower agrees that:

     A.  COMPLIANCE WITH LAW, ETC. Borrower will comply in all material respects
with all applicable laws, rules, regulations and orders.

     B.  ORDINARY COURSE OF BUSINESS.  Borrower will not sell,  lease,  transfer
or otherwise  dispose of all or substantially  all of its assets,  except in the
ordinary course of business.

     C.  FINANCIAL REPORTING.  Borrower  will  furnish  financial  statements to
Clark  annually  which  shall  include a balance  sheet  and  income  statement.


                                      14

<PAGE>



Borrower shall also provide, annually, a copy of Borrower's prior year's federal
income tax return.

     9.  COLLATERAL MAINTENANCE.

     A. The J & J Medical Agreement, (the "Contract") which serves as Collateral
to Clark on advances made  hereunder,  continues so long as J & J Medical,  Inc.
sells Dinamap PLUS Monitors, but may be terminated upon the dissolution, winding
up, bankruptcy or material breach of contract of either party. Consequently, the
value of the Contract as security is totally  dependant upon the volume of sales
and continued sales of the monitor, over which Borrower has no control. Further,
the  Borrower  may be unable to provide  additional  security in the event Clark
deemed  himself to be insecure or the  perceived  value of the Contract  were to
decline.

     B. Should  Clark be required to reduce the balance of his own bank loan due
to insufficient Collateral, which loan has been used to fund the advances to the
Borrower,  the Borrower  agrees to cooperate in good faith with Clark to attempt
to reduce the principal owing hereunder in sufficient amounts to permit Clark to
meet his obligations to his lender.

    10.  EVENTS OF DEFAULT; REMEDIES.  If  one  or  more of the following events
shall occur ("Events of Default" or an "Event of Default"):

     A.  Borrower shall default in the due and punctual payment of  principal or
interest  on the Line of Credit or any  other of its  obligations  due to Clark,
when the same become due, whether at maturity or otherwise; or

     B.  Borrower  shall  fail  to  perform  or  observe any other of the terms,
provisions, covenants,  restrictions,  agreements or obligations to be performed
by it under this Agreement,  or under agreements or instruments given under this
Agreement; or

     C. Any  representation  or  warranty  made by  Borrower  herein or pursuant
hereto or otherwise in any report,  certificate or other instrument furnished in
connection with this agreement shall prove to have been inaccurate or incomplete
in any material respect on the date which it was made; or

     D. Borrower  shall be adjudicated  bankrupt or insolvent,  or generally not
pay its debts as they  become  due,  or make an  assignment  for the  benefit of
creditors;  or  Borrower  shall  apply for or  consent to the  appointment  of a
custodian,  receiver,  trustee,  or  similar  officer  for  it  or  for  all  or
substantially all of its property.

Then, Clark, upon the occurrence of any Event(s) of Default,  may terminate this
Agreement and, in addition,  without presentment,  demand,  protest or notice of
any kind, all of which are hereby

                                      15

<PAGE>



expressly waived by Borrower:  (a) declare the unpaid principal balance, and all
interest thereon and all other amounts payable under this Agreement  immediately
due and payable.  (b) immediately,  without  expiration of any further period of
grace,  enforce  payment of all obligations of Borrower under this Agreement and
under  agreements  executed in connection  herewith and may exercise any and all
other remedies granted to Clark at law, in equity or otherwise. (c) Exercise all
of Clark's rights under the terms of any security agreement,  assignment,  trust
deed, pledge or other lien document executed in connection herewith.

     E.  Borrower  agrees  that  after  the  exercise  by Clark of the  remedies
specified  above  and both  before  and  after  judgment,  the  obligations  due
hereunder shall accrue interest until paid at the rate of eighteen percent (18%)
per annum.

     F. After default,  Borrower agrees to pay all reasonable  expenses and fees
including reasonable  attorney's fees and court costs incurred in the collection
of the obligations  and/or incurred in any bankruptcy or insolvency  proceedings
or arbitration proceedings.


11.  MISCELLANEOUS

     A. ENTIRE  AGREEMENT.  This  Agreement  embodies  the entire and  exclusive
agreement and understanding  between the parties hereto and supersedes all prior
agreements and  understandings  relating to the subject  matter hereof.  Clark's
failure to insist  upon strict  compliance  with any term or  provision  of this
Agreement  shall  not be deemed a waiver  of  Clark's  right to insist on strict
performance by Borrower at a later time.

     B.  SURVIVAL.  All   representations,   warranties  and  agreements  herein
contained on the part of Borrower shall survive the execution of this Agreement.

     C.  INDEMNITY.  The Borrower  hereby  agrees to defend,  indemnify and hold
Clark  harmless  from  and  against  any and  all  claims,  damages,  judgments,
penalties,  costs and expenses (including  attorneys fees and court costs now or
hereafter  arising  from  the  aforesaid  enforcement  of this  clause)  arising
directly or indirectly from the activities of the Borrower and its Subsidiaries,
its  predecessors  in interest,  or third parties with whom it has a contractual
relationship,  or arising  directly  or  indirectly  from the  violation  of any
environmental  protection,  health,  or safety  law,  whether  such  claims  are
asserted  by any  governmental  agency or other  person.  This  indemnity  shall
survive termination of this Agreement.

     D.  NOTICES.  Except as otherwise provided herein,  all notices,  requests,
consents and demands hereunder shall be in writing and shall be  effective  upon


                                      16

<PAGE>




receipt or three (3) business days after being duly deposited in the mail, first
class,  postage prepaid,  or delivered to the respective  parties at the address
set forth  below the  signatures  to this  Agreement.  Any party may  change the
address to which  notices are to be sent by notice of such  change  given to the
other parties as provided herein.

     E.  SUCCESSORS AND ASSIGNS.  This Agreement shall be binding upon and inure
to the benefit of Borrower,  Clark and their prospective successors and assigns;
provided,  however,  that  Borrower  may not transfer its rights to borrow under
this Agreement without the prior written consent of Clark.

     F.  CHOICE OF LAW.  This  Agreement  shall  be governed by and construed in
accordance with the laws of the State of Utah.

     G. AMENDMENT AND WAIVER.  Neither this Agreement nor any provisions  hereof
may be  changed,  waived,  discharged  or  terminated  orally,  but  only  by an
instrument  in  writing  signed by the party  against  whom  enforcement  of the
change,  waiver,  discharge or termination is sought.  This Agreement is a final
expression  of the  agreement  between the  Borrower  and Clark and this written
agreement may not be contradicted by evidence of any alleged oral agreement.

    H.  LINE OF CREDIT LIMIT:  $450,000.

    I.  MARGIN:  The additional percentage points ("Margin") to be  added to the
Loan Index Rate are .25 percentage  points. The initial interest rate payable on
advances made under the Line of Credit is 8.75% per annum.

     IN WITNESS  WHEREOF,  the parties  hereto have caused this  Agreement to be
executed by authority duly given as of this 23rd day of June, 1997.


CLARK:                         InMedica Development Corporation



/s/ Larry E. Clark             /s/ Richard Bruggeman
--------------------------     -----------------------------
Larry E. Clark                 Richard Bruggeman, Treasurer
1036 Oak Hills Way             60 South 600 East,  Suite 150
Salt Lake City, Utah 84108     Salt Lake City, Utah  84102

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