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, 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 or 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 August 1, 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


                                       As of June 30,
                                           1998
                                       --------------
                                        (Unaudited)
CURRENT ASSETS:
   Cash                             $     53,311
   Prepaid expenses                        8,464
                                     -----------

        Total current assets              61,775

EQUIPMENT AND FURNITURE,
   at cost, less accumulated
   depreciation of $250,987                2,002



OTHER ASSETS                               2,196


        Total assets                $     65,973
                                    ============




            See notes to condensed consolidated financial statements.

                                        2

<PAGE>





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


                      LIABILITIES AND STOCKHOLDERS' DEFICIT


                                    As of June 30,
                                         1998
                                    --------------
                                     (Unaudited)


CURRENT LIABILITIES:
   Current portion of note
     payable                        $  145,000
   Consulting fee payable to
    related parties                     47,633
   Accounts payable                        603
   Accrued payroll                         792
                                    ----------


        Total current liabilities      194,058
                                    ----------


STOCKHOLDERS' DEFICIT:
   Common stock, $.001 par value;
    20,000,000 shares authorized,
    8,550,899 outstanding                8,551
   Preferred shares,  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        6,795,087
   Accumulated deficit              (7,045,825)
                                    ----------

        Total stockholders'
         deficit                    (  128,085)
                                    ----------
        Total liabilities and
         stockholders' deficit      $   65,973
                                    ==========


            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 Six
                                   Months Ended              Months Ended
                                     June 30,                  June 30,
                              ------------------------  ------------------------
                                 1998         1997         1998         1997
                              -----------  -----------  -----------  -----------
                                    (Unaudited)              (Unaudited)

<S>                           <C>          <C>          <C>          <C>        
ROYALTY REVENUES              $    67,360  $   108,000  $    67,360  $   108,000
                              -----------  -----------  -----------  -----------

OPERATING EXPENSES:
  General and
   administrative                  46,168       59,875      117,132      107,715
  Research and
   development                     89,284       43,382      155,642       75,065
                              -----------  -----------  -----------  -----------
    Total operating expenses      135,452      103,257      272,774      182,780
                              -----------  -----------  -----------  -----------


(LOSS) INCOME FROM OPERATIONS     (68,092)       4,743     (205,414)     (74,780)
                              -----------  -----------  -----------  -----------


OTHER (EXPENSE) INCOME:
  Interest income                     388          134          983          140
  Interest expense                 (3,207)      (9,105)      (6,421)     (18,608)
                              -----------  -----------  -----------  -----------
  Total other expense              (2,819)      (8,971)      (5,438)     (18,468)
                              -----------  -----------  -----------  -----------


NET LOSS                          (70,911)      (4,228)    (210,852)     (93,248)
PREFERRED STOCK DIVIDENDS          (2,281)      (2,282)      (4,563)      (4,564)
                              -----------  -----------  -----------  -----------

NET LOSS APPLICABLE
  TO COMMON SHARES            $   (73,192) $    (6,510) $  (215,415) $   (97,812)
                              ===========  ===========  ===========  ===========
Net loss per common share
    (basic and diluted)       $      (.01) $      (.00) $      (.03) $      (.01)
                              ===========  ===========  ===========  ===========
 Weighted average number
  of common shares
  outstanding                   8,550,899    7,999,232    8,550,899    7,999,232
                              ===========  ===========  ===========  ===========

</TABLE>

            See notes to condensed consolidated financial statements.

                                        4

<PAGE>


                 INMEDICA DEVELOPMENT CORPORATION AND SUBSIDIARY
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

                           DECREASE (INCREASE) IN CASH

                                            For the Six Months Ended
                                                   June 30,
                                          --------------------------
                                             1998            1997
                                          -----------    -----------
                                                  (Unaudited)

CASH FLOWS FROM OPERATING ACTIVITIES:

  Net loss                               $  (215,415)    $   (93,248)
  Adjustments to reconcile net
    loss to net cash provided
    by (used in) operating activities-
      Depreciation                               432             582
      Expense related to stock options
       issued as compensation for services    63,000
      Change in assets and liabilities-
        Decrease in royalties receivable      67,200         209,280
        Decrease in prepaid expenses           9,999          12,962
        Increase in consulting fees payable
         to related party                     25,998             -
       (Decrease) increase in accounts
         payable                                (428)          1,219
        Decrease in accrued payroll           (6,152)         (7,829)
        Decrease in interest payable          (4,752)         (8,362)
        Decrease in related party payable    (25,000)        (39,000)
                                          -----------    -----------

          Net cash provided by (used in)
           operating activities              (80,555)         75,604
                                          -----------    -----------



            See notes to condensed consolidated financial statements.

                                        5

<PAGE>





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

                                          For the Six Months Ended
                                                  June 30,
                                            1998             1997
                                         ---------        ---------
                                                  (Unaudited)


CASH FLOWS FROM FINANCING ACTIVITIES:

 Preferred stock dividends paid            (4,563)          (4,564)
 Principal payments on note payable
   to related party                           -            (67,500)
                                         ---------        ---------


       Net cash used in
         financing activities              (4,563)         (72,064)
                                         ---------        ---------



NET (DECREASE) INCREASE IN CASH           (85,118)           3,540

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

CASH AT END OF THE PERIOD               $  53,311        $ 181,126
                                         =========        =========



            See notes to condensed consolidated financial statements.

                                        6

<PAGE>


                 INMEDICA DEVELOPMENT CORPORATION AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Note 1-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 six month periods ended June 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 Johnson and Johnson  agreement  are  presently the
Company's  sole source of revenue  and the  Company is not able to estimate  the
duration or amount of future  royalties from the Johnson and Johnson  agreement.
Accordingly,  there can be no assurance as to continuing  royalty receipts.  The
Company generated a net loss from operations of $205,414 during the period ended
June 30, 1998 and as of June 30, 1998, the Company had an accumulated deficit of
$7,045,825. 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.


                                        7

<PAGE>



Item 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
         CONDITION AND PLAN OF OPERATION

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

     For the three  months  ended March 31, 1998,  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 six months ended June 30,
1998 were $67,360,  or $40,640 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").  These royalties 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.

     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  presently  paying  quarterly
interest payments on the note.  InMedica intends to continue to look for funding
sources to retire the note as to which it has no commitments.  Funds invested in
the development of the proposed hematocrit device have been expensed as research
and  development  and the ability of the Company to use the 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
---------------------

     See "Liquidity and Capital  Resources" for an explanation as to the lack of
revenues  during the quarter ended March 31, 1998. The net loss from  operations
of  $205,414  for the six  months  ended June 30,  1998  increased  by  $130,634
compared to the comparable period of the prior year as royalty revenues declined
by $40,640 and research and development  expenses  increased by $80,577 compared
to the prior year. The increase in research and development  expenses was due to
payments made under an 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  June  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, resulting in lower interest payments
thereafter.  General  and  administrative  expenses  increased  due  to  expense
associated with the issuance of stock options.

     The Company does not expect that its operations  will be directly  affected
by the Year 2000 issue, but is unable to forecast the indirect  effect,  if any,
of computer  malfunction  related to the issue, on its future  operations in the

                                       8
<PAGE>


medical technology markets. However, the Company has contacted JJMI and has been
assured  that  JJMI is aware of the issue and  acting  responsibly  to avoid any
adverse  impact on JJMI's  ability to conduct  its  operations  which  presently
generate royalty income 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

                                        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, 1998                          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                (27)          Financial Data Schedule


                                       11