================================================================================

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   ----------

                                    FORM 10-Q


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


     For the quarter ended: May 31, 1999 Commission file number: 0-11411


                                   Q-MED, INC.
        ----------------------------------------------------------------
        (Exact name of small business issuer as specified in its charter)


                     DELAWARE                            22-2468665
        -------------------------------               -------------------
        (State or other jurisdiction of                (I.R.S. Employer
         incorporation or organization)               Identification No.)


      100 METRO PARK SOUTH, LAURENCE HARBOR, NEW JERSEY           08878
      -------------------------------------------------         ----------
         (Address of principal executive offices)               (Zip Code)


         (Issuer's telephone number, including area code) (732) 566-2666


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities 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 common stock
on June 9, 1999: 11,568,989

================================================================================


<PAGE>


                                                Q-MED, INC. AND SUBSIDIARIES
                                                CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>

                                                                                  May 31, 1999    November 30,
                                                                                   (Unaudited)       1998
                                                                                   -----------    -------------
<S>                                                                                <C>             <C>
ASSETS

Current assets
Cash and cash equivalents ......................................................   $    372,493    $  2,075,179
Investments ....................................................................      1,000,000            --
Accounts receivable, net of
      allowances of approximately
      $500,000 and $500,000 respectively .......................................        182,015         304,465
Inventories ....................................................................        465,879         503,994
Prepaid expenses and other current assets ......................................        148,129          57,776
                                                                                   ------------    ------------
                                                                                      2,168,516       2,941,414

Product software development costs .............................................         21,785          34,856
Property and equipment, net ....................................................        508,477         578,404
Other assets ...................................................................        189,216         202,750
                                                                                   ------------    ------------
                                                                                   $  2,887,994    $  3,757,424
                                                                                   ============    ============

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities
Accounts payable and accrued expenses ..........................................   $    563,527    $    549,253
                                                                                   ------------    ------------
                                                                                        563,527         549,253

Convertible long-term debt .....................................................        950,000         950,000
Leases payable - long term .....................................................         87,357         107,724
Deferred revenue ...............................................................         18,779          31,448
                                                                                   ------------    ------------
                                                                                      1,619,663       1,638,425

Temporary equity - put option ..................................................           --         4,021,991

Stockholders' equity Common stock $.001 par value; 20,000,000 shares authorized;
      11,590,989 and 11,586,321 shares
      issued and 11,568,989 and 11,564,321 outstanding .........................         11,591          11,587
Paid-in capital ................................................................     21,183,828      17,150,547
Accumulated deficit ............................................................    (19,839,900)    (18,989,501)
Accumulated other comprehensive income
      Unrealized holding loss/gain on
      available-for-sale securities ............................................        (11,563)           --
                                                                                   ------------    ------------
                                                                                      1,343,956      (1,827,367)

Less:  treasury stock at cost, 22,000 common shares ............................        (75,625)        (75,625)
                                                                                   ------------    ------------
Total stockholders' equity .....................................................      1,268,331      (1,902,992)
                                                                                   ------------    ------------
                                                                                   $  2,887,994    $  3,757,424
                                                                                   ============    ============
</TABLE>

           See Accompanying Notes to Consolidated Financial Statements

<PAGE>



                          Q-MED, INC. AND SUBSIDIARIES
         CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
                                   (Unaudited)
<TABLE>
<CAPTION>


                                          For the Six     For the Three    For the Six     For the Three
                                          Months Ended      Months Ended   Months Ended     Months Ended
                                          May 31, 1999     May 31, 1999    May 31, 1998    May 31, 1998
                                          ------------    -------------   -------------   --------------
<S>                                       <C>             <C>             <C>             <C>
Sales .................................   $  1,011,853    $    619,635    $    974,538    $    519,422

Less sales returns and
        allowances ....................           --              --             5,530           5,530
                                          ------------    ------------    ------------    ------------
        Net sales .....................      1,011,853         619,635         969,008         513,892

Cost of sales .........................        514,129         284,983         574,169         315,250
                                          ------------    ------------    ------------    ------------
        Gross profit ..................        497,724         334,652         394,839         198,642

Selling, general and
        administrative expenses .......      1,035,919         523,793       1,384,700         685,784
Provision for uncollectible
        accounts ......................           --              --           119,200          57,542
Research and development
        expenses ......................        279,579         139,934         335,481         165,315
                                          ------------    ------------    ------------    ------------
Income (loss) from operations .........       (817,774)       (329,075)     (1,444,542)       (709,999)

Interest expense ......................        (86,048)        (42,910)        (95,199)        (45,664)
Other income ..........................         53,423          41,359          40,292          17,429
                                          ------------    ------------    ------------    ------------
Net (loss) ............................   $   (850,399)   $   (330,626)   $ (1,499,449)   $   (738,234)

Other comprehensive income (loss)
   Unrealized gains on securities
      Unrealized holding gains (losses)
      arising during period ...........        (11,563)         (6,560)   $       --      $       --
                                          ------------    ------------    ------------    ------------
Comprehensive (loss) ..................   $   (861,962)   $   (337,186)   $ (1,499,449)   $   (738,234)
                                          ============    ============    ============    ============
(Loss) per common
        share .........................   $       (.07)   $       (.03)   $       (.15)   $       (.07)
                                          ------------    ------------    ------------    ------------
Weighted average number of
        shares of common stock
        outstanding ...................     11,589,655      11,590,989       9,653,459       9,658,291

</TABLE>


           See Accompanying Notes to Consolidated Financial Statements


<PAGE>



                          Q-MED, INC. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                      For the Six Months Ended May 31, 1999
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                         Common Stock
                                                                                      Held in Treasury
                                     Common         Paid-in      Accumulated    ---------------------------
                                      Stock         Capital         Deficit          Shares          Amount           Total
                                     ------         -------      -----------    -----------------    ------           -----
<S>                              <C>             <C>             <C>                   <C>      <C>             <C>
Balance--November 30, 1998 ...   $     11,587    $ 17,150,547    $(18,989,501)         22,000   $    (75,625)   $ (1,902,992)

Exercise of stock options
      and warrants ...........              4          11,290                                                         11,294

Net loss for the six months
      ended May 31, 1999 .....                                      (861,962)                                       (861,962)

Elimination of put option
      related to shares issued
      November, 1998 .........                      4,021,991                                                      4,021,991
                                 ------------    ------------    ------------          ------   ------------    ------------
Balance--May 31, 1999 ........   $     11,591    $ 21,183,828    $(19,851,463)         22,000   $    (75,625)   $  1,268,331
                                 ============    ============    ============          ======   ============    ============

</TABLE>



           See Accompanying Notes to Consolidated Financial Statements


<PAGE>



                          Q-MED, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)

<TABLE>
<CAPTION>

                                                                                 For the Six     For the Six
                                                                                 Months Ended    Months Ended
                                                                                  May 31, 1999   May 31, 1998
                                                                                -------------  --------------
<S>                                                                             <C>            <C>
Cash flows from operating activities:
      Net (loss) ............................................................   $  (861,962)   $(1,499,449)
                                                                                -----------    -----------
Adjustments to reconcile net income to cash (used in) provided by operating
      activities:
      Depreciation and amortization .........................................       128,112        136,728
      (Increase) decrease in
          Accounts receivable ...............................................       122,450         16,864
          Inventory .........................................................        38,115        105,421
          Prepaid expenses and other current assets .........................        14,274         11,837
      Increase (decrease) in
          Accounts payable and accrued liabilities ..........................       (90,353)       (67,691)
      Other, net ............................................................       (33,040)        41,921
                                                                                -----------    -----------
      Total adjustments .....................................................       179,558        245,080
                                                                                -----------    -----------
                                                                                $  (682,404)   $(1,254,369)
                                                                                ===========    ===========
Cash flows from investing activities:
      Purchase of securities available for sale .............................    (1,000,000)          --
      Capital expenditures, net .............................................       (31,575)      (163,004)
                                                                                -----------    -----------
      Net cash provided by (used in) investing activities ...................   $(1,031,575)   $  (163,004)
                                                                                ===========    ===========
Cash flows from financing activities:
      Net proceeds from issuance of 8% Convertible Notes ....................                    1,955,805
      Proceeds from issuance of common stock ................................        11,293         15,225
                                                                                -----------    -----------
      Net cash provided by financing activities .............................   $    11,293    $ 1,971,030
                                                                                ===========    ===========
Net (decrease) increase in cash and cash equivalents ........................    (1,702,686)       553,657

Cash and cash equivalents at beginning of period ............................     2,075,179        640,266
                                                                                -----------    -----------
Cash and cash equivalents at end of period ..................................   $   372,493    $ 1,193,923
                                                                                ===========    ===========
Supplemental disclosure of cash flow information:
   Cash paid during the period for:
      Interest ..............................................................   $    10,048    $    15,201


</TABLE>





           See Accompanying Notes to Consolidated Financial Statements


<PAGE>



                          Q-MED, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Basis of Presentation

The accompanying unaudited consolidated condensed financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information. Accordingly, these financial statements do not include
all of the information and footnotes required by generally accepted accounting
principles. In the opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have been
included. Operating results for the six month period ended May 31, 1999 are not
necessarily indicative of the results that may be expected for the year ending
November 30, 1999. These consolidated condensed financial statements should be
read in conjunction with the financial statements and footnotes thereto included
in the Company's annual report on Form 10-K for the year ended November 30,
1998.

Note 1 - Summary of Significant Accounting Policies

Reclassifications

Certain reclassifications have been made to the prior years income statements in
order to conform to the current year presentation. Approximately $403,000 and
$170,000 was reclassed from selling, general and administrative expenses into
cost of goods sold and research and development expenses for the six and three
months ended May 31, 1999, respectively.

Comprehensive Income

As of December 1, 1998, the Company adopted Statement of Financial Accounting
Standards No. 130 ("SFAS 130"), "Reporting Comprehensive Income." SFAS 130
establishes standards for the reporting and presentation of comprehensive
income, its components and accumulated balances. Comprehensive income, as
defined, includes all changes to equity except those resulting from investments
by or distributions to owners. Among other disclosures, SFAS 130 requires that
all items that are required to be recognized under current accounting standards
as components of comprehensive income be reported in a financial statement that
is displayed with the same prominence as other financial statements. Adoption of
this statement had no effect on the Company's financial position or results of
operations.

Note 2- Results of Operations

In the opinion of management, the financial statements for the six months ended
May 31, 1999 and May 31, 1998 include all adjustments and accruals necessary for
a fair presentation. All such adjustments are of a normal recurring nature. The
results of operations for the six months ended May 31, 1999 are not necessarily
indicative of the results which may be expected for the full year ended November
30, 1999.


Note 3 - Investments
<TABLE>
<CAPTION>

                                                                     Gross            Gross
                                                  Amortized        Unrealized       Unrealized           Fair             Carrying
                                                    Cost             Gains            Losses             Value             Amount
                                                 ----------        ----------      ------------       ----------         -----------
<S>                                              <C>               <C>             <C>                <C>                <C>
Available-for-sale
      U.S. Treasury securities ................. $1,011,563        $     --        $   (11,563)       $1,000,000         $1,000,000
                                                 ----------        ----------      -----------        ----------         ----------
                                                 $1,011,563        $     --        $   (11,563)       $1,000,000         $1,000,000
                                                 ==========        ==========      ===========        ==========         ==========

</TABLE>


<PAGE>

Note 4 - Inventories

Inventories, consisting of finished units and raw materials, are stated at the
lower of cost (determined on a moving weighted average method) or market.
Inventories consist of the following:

                                   May 31,    November 30,
                                    1999        1998
                                  --------   -------------
                                (Unaudited)

Raw materials (component parts)   $198,447      $216,350
Finished units ................    267,432       287,644
                                  --------      --------
                                  $465,879      $503,994
                                  ========      ========

Note 5 - Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses include the following:

                                   May 31,        November 30,
                                   1999             1998
                                 -----------      ------------
                                 (Unaudited)

Accounts payable trade ........   $189,471         $278,224
Deferred revenue ..............    144,888          156,813
Accrued payroll and commissions     73,524           78,539
Other accrued expenses ........     73,397           35,677
Interest Payable ..............     82,247             --
                                  --------         --------
                                  $563,527         $549,253
                                  ========         ========

Note 6 - Principles of Consolidation

The consolidated financial statements include the accounts of qmed, Inc., its
83% owned subsidiary, Heart Map, Inc., and its 100% owned subsidiary,
Interactive Heart Management Corp., which was formed in March, 1995. Interactive
Heart Management Corp. provides coronary artery disease management services to
health care providers throughout the United States. All inter-company accounts
and transactions have been eliminated.


Note 7 - Year 2000

The Company recognizes the need to ensure that its operations will not be
adversely impacted by the Year 2000 software failures. All medical devices sold
by qmed, Inc. are Year 2000 compliant. ohms|cad was designed to be Year 2000
compliant. The Company has notified all of its customers of the need for upgrade
where necessary. All development costs have been expensed as incurred.

All of the Company's internal operating systems are on schedule for compliance
and should be complete by August 1999. The remaining costs to modify the
Company's systems for Year 2000 compliance are expected to be less than $50,000.



<PAGE>



Part I - Management's Discussion and Analysis of Financial Condition and Results
         of Operations

Results of Operations

The following table presents the percentage of total revenues for the periods
indicated and changes from period to period of certain items included in the
Company's Statements of Operations.

<TABLE>
<CAPTION>


                                                                                           Period to Period Percentage Changes
                                       For the Six Months     For the Three Months     ---------------------------------------------
                                           Ended May 31,          Ended May 31,        For the Six Months      For the Three Months
                                       --------------------   ---------------------       Ended May 31,            Ended May 31,
                                         1999        1998       1999          1998        1999 Vs. 1998            1999 Vs. 1998
                                       ---------   --------   ---------     -------    -------------------     ---------------------
<S>                                      <C>        <C>          <C>        <C>                <C>                      <C>
Sales (net) ..........................   100.0%      100.0%      100.0%      100.0%              4.4                     20.6
Cost of Sales ........................    50.8        59.3        46.0        61.3             (10.5)                    (9.6)
                                         -----      ------       -----      ------
Gross Profit .........................    49.2        40.7        54.0        38.7              26.1                     68.5
Selling, general and administrative ..   102.4       143.0        84.5       133.4             (25.2)                   (23.6)
Provision for uncollectible accounts .     -          12.3         -          11.2               *                        *
Research and development .............    27.6        34.7        22.6        32.2             (16.7)                   (15.4)
                                         -----      ------       -----      ------
(Loss) from continuing operations ....   (80.8)     (149.3)      (53.1)     (138.1)            (43.4)                   (53.7)
Interest expense .....................    (8.5)       (9.9)       (7.0)       (8.9)             (9.6)                    (6.0)
Other Income .........................     5.3         4.2         6.7         3.4              32.6                    137.3
                                         -----      ------       -----      ------
Net (loss) ...........................   (84.0)     (155.0)      (53.4)     (143.6)            (43.3)                   (55.2)
                                         =====      ======       =====      ======

</TABLE>

SIX AND THREE MONTHS ENDED MAY 31, 1999 COMPARED WITH THE SIX AND THREE MONTHS
ENDED MAY 31, 1998

Net sales for the six months ended May 31,1999 increased by 4.4% or
approximately $43,000 when compared to the six months ended May 31,1998. Net
sales for the three months ended May 31,1999 increased by 20.6% or approximately
$106,000 when compared to the three months ended May 31,1998. This overall
increase is primarily due to a 17% increase in revenue related to ohms|cad(R).
The Company's focus has been primarily on the marketing of the ohms|cad system
to managed care organizations through its wholly owned subsidiary, Interactive
Heart Management Corp. ("IHMC"). The Company expects revenue to increase during
the subsequent quarters as new contracts for ohms|cad are completed. The Company
has several contracts involving approximately 250,000 lives which are awaiting
final documentation.

Revenues received through IHMC are structured on a contractual basis whereby the
Company receives a payment from physician groups and health management
organizations calculated as a percentage of the reduction of the organization's
costs of providing care for CAD patients. An initial baseline is selected and
the total CAD costs are computed as baseline costs. The ohms|cad system is then
placed in service and used throughout the contract period to reduce costs and
improve the health status of patients with coronary disease. At the end of each
contract year the total CAD costs are then calculated and compared to the
baseline year costs. The savings derived are distributed to the Company on a
predetermined basis by the contracting organization. From inception of the
contract, the Company receives a monthly pre-payment of a portion of the
estimated savings. Such pre-payments are recorded as revenue. Once the actual
reduction of cost is calculated, the pre-payments are subtracted and any
additional savings distribution owed to the Company is billed and recorded at
that time.

The Company has continued to aggressively market ohms|cad to leading health care
providers throughout the United States. The Company has had discussions with
large providers to use its ohms|cad system on a national scale within their
organizations to effectively manage coronary artery disease.

The Company's gross profit margin for the six months ended May 31, 1999
increased to 49.2% from 40.7% for the six months ended May 31, 1998. The
Company's gross profit margin for the three months ended May 31, 1999 increased
to 54% from 38.7% for the three months ended May 31, 1998. The increase was
primarily due to the consolidation of the production and customer support
operations related to the Company's capital equipment segment as well as the
additional revenue earned through upgrading customer's software for the Year
2000.

<PAGE>


Selling, general and administrative expenses for the six months ended May 31,
1999 decreased by approximately 25% or $349,000 compared to the six months ended
May 31, 1998. Selling, general and administrative expenses for the three months
ended May 31, 1999 decreased by approximately 24% or $162,000 compared to the
three months ended May 31, 1998. This decrease was primarily due to the decrease
in the level of selling costs related to the Company's capital equipment segment
as well as overall cost containment. Management expects selling, general and
administrative expenses to increase as new clients are added to the ohms|cad
program.

Research and development expenses for the six months ended May 31, 1999
decreased by approximately 16.7% or $56,000 when compared to the corresponding
six months ended May 31, 1998. Research and development expenses for the three
months ended May 31, 1999 decreased by approximately 15.4% or $25,000 when
compared to the corresponding three months ended May 31, 1998. During the past
year the Company has focused its R&D efforts primarily on the development of
new, advanced disease management software programs . These programs incorporate
state of the art digital communications, data management, security and
information technology. The Company intends to continue to improve and expand
the capabilities of the ohms|cad system.

The Company has conducted a review of its computer systems and products to
identify the systems that could be affected by the "Year 2000" issue and is
implementing its plan to resolve the issue. The Year 2000 problem is the result
of computer programs being written using two digits rather than four to define
the applicable year. Any of the Company's programs that have time sensitive
software may recognize a date using "00" as the year 1900 rather than the year
2000. This could result in a major system failure or miscalculations. The
Company presently believes, with modifications to existing software and
converting to new software, the Year 2000 problem will not pose significant
operational problems for the Company's computer systems as so modified and
converted. However, if such modifications and conversions are not completed
timely, the Year 2000 problem may have a material impact on the operations of
the Company. Certain of the Company's products will require software upgrade to
deal with the problem as well. The Company has begun to implement a Year 2000
upgrade for each of its products that are the subject of warranties and
estimates that the total expense to be charged, including engineering, testing,
parts and labor will be approximately $180,000, most of which has been expensed
as incurred during fiscal 1998. The Company estimates the cost of upgrading
internal software programs to be about $25,000 which will be incurred during
1999. While the Company's ohms|cad system is fully compliant, the Company relies
on the information technology departments of existing and prospective customers
for data utilized in proposing a contract and in measuring the amount of costs
saved through the implementation of ohms|cad. The Company cannot assess the
effect that Year 2000 programs implemented by these other companies will have.

Liquidity and Capital Resources

To date, the Company's principal sources of working capital have been provided
by proceeds from public and private placements of securities and the sale of
certain assets. Since the Company's inception, sales of securities and assets
have generated approximately $21,000,000 less applicable expenses.

On December 18, 1997, the Company sold 8% Convertible Notes (the "Notes") in the
principal amount of $2,000,000 in a private placement to three investors.
Interest on the Notes accrued monthly and was due on December 18, 2002. On
November 16, 1998, the Company sold an aggregate of 1,926,702 shares of its
common stock for $3,217,626 in a private placement to investors led by the same
three investors that purchased the Notes. The Company received gross cash
proceeds of $2,020,936 from the sale of the shares and the balance was paid by
converting $1,050,000 of $2,000,000 principal amount of the Notes and accrued
interest of $146,663 into shares of common stock. The remaining $950,000
principal amount of the Notes were amended to increase the interest rate to 16%
per annum, and to grant the Noteholders a security interest in substantially all
of the Company's assets. Interest on the Notes is capitalized annually and will
be due at maturity. The Company may redeem the Notes for cash or common stock
for certain premiums and subject to conditions contained in the amended Note
Agreement. The Company is required to redeem the Notes at higher premiums in the
event of a change of control. The Note Agreement prohibits the Company from
paying dividends until the Notes are paid.



<PAGE>




In connection with the sale of the shares, the Company granted certain rights to
the purchasers, including registration rights and the right to cause the Company
to purchase the shares at certain prices in certain events, such as bankruptcy,
a default in payments or if the Company is no longer listed on the NASDAQ Small
Cap Market.

On May 17, 1999 the agreement was amended to eliminate such redemption rights in
exchange for 290,000 common stock purchase warrants exercisable at $1.67 per
share and 200,000 warrants exercisable at $2.87 per share (subject to adjustment
described below) until November 15, 2005 to be distributed pro rata among such
holders. The exercise price of all the warrants issued and amended may be
adjusted in certain circumstances to protect holders against dilution and will
increase to $3.00 in the event the Company has executed binding contracts to
manage 1,000,000 or more lives by August 31, 1999. The elimination of these
redemption rights resulted in a significant increase to total stockholders'
equity because such rights were previously characterized as temporary equity.

The Company had working capital of $1,604,989 at May 31, 1999 compared to
$2,392,161 at November 30, 1998 and ratios of current assets to current
liabilities of 3.9:1 and 5.4:1 as of November 30, 1998. The working capital
decrease of approximately $787,000 was primarily due to the net loss of
approximately $862,000 for the six months ended May 31, 1999.

The Company has anticipated that funds generated from operations, together with
cash and investments, will be sufficient to meet its working capital
requirements for the current year. In the event sales do not meet the Company's
expectations, the Company may be required to seek additional financing to
support IHMC's sales efforts.

The Company maintains a general policy of net 30-day payment terms on equipment
sales to distributors, cash or third-party leasing arrangements with direct
sales to physicians and letters of credit for international sales. In some
instances, the Company has extended payment terms beyond net 30 to selected
distributors. The Company's receivables balance over 90 days past due was 15.1%
of the receivables balance at May 31, 1999 compared to 11.4% at November 30,
1998. The Company is aggressively seeking payment arrangements on these overdue
amounts.

The Company, with its IHMC subsidiary, enters into contract arrangements with
physician groups and managed care organizations where either a prepayment toward
a cost savings is made per month or billing is done on a per member per month
basis. The Company expects revenue to increase as it begins the utilization of
ohms|cad with additional arrangements entered into during fiscal 1999.

The Company believes that there has not been a significant impact from inflation
on the Company's operations during the past three fiscal years.


Additional Factors That May Affect Future Results

FUTURE OPERATING Results Future operating results may be impacted by a number of
factors that could cause actual results to differ materially from those stated
herein, which reflect management's current expectations. These factors include
worldwide economic and political conditions, industry specific factors, the
Company's ability to maintain access to external financing sources and its
financial liquidity, the acceptance of the ohms|cad system by managed care
organizations, and the Company's ability to manage expense levels.

NEED FOR ADDITIONAL CAPITAL As of May 31, 1999, the Company had approximately
$1,372,000 of cash and short term investments. The Company has experienced
negative cash flows since fiscal 1995 and recently experienced a reduction in
negative cash flow. The Company expects the monthly negative cash flow to
continue to decrease as a result of increased activities related to ohms|cad.
The Company's future success is highly dependent upon its continued access to
sources of financing which it believes are necessary for the continued support
of IHMC's sales effort. It remains the Company's policy to seek the minimum
amount of capital required to finance existing


<PAGE>




contracts based on market conditions. In the event the Company is unable to
maintain access to its existing financing sources, or obtain other sources of
financing, there would be a material adverse effect on the Company's business,
financial position and results of operations.

REGULATION The Company's products are subject to extensive government regulation
in the United States by federal, state and local agencies including the Food and
Drug Administration. The process of obtaining and maintaining FDA and other
required regulatory approvals for the Company's products is lengthy, expensive
and uncertain. There can be no assurance that changes in existing regulations or
the adoption of new regulations will not occur which will adversely affect the
Company.

STOCK PRICE FLUCTUATIONS The Company's participation in a highly competitive
industry often results in significant volatility in the Company's common stock
price. This volatility in the stock price is a significant risk investors should
consider.

FORWARD LOOKING STATEMENTS This report contains certain forward-looking
statements that are based on current expectations. In light of the important
factors that can materially affect results, including those set forth above and
elsewhere in this report, the inclusion of forward-looking information herein
should not be regarded as a representation by the Company or any other person
that the objectives or plans of the Company will be achieved. The Company may
encounter competitive, technological, financial and business challenges making
it more difficult than expected to continue to market its products and services;
competitive conditions within the industry may change adversely; the Company may
be unable to retain existing key management personnel; the Company's forecasts
may not accurately anticipate market demand; and there may be other material
adverse changes in the Company's operations or business. Certain important
factors affecting the forward looking statements made herein include, but are
not limited to (i) accurately forecasting capital expenditures and (ii)
obtaining new sources of external financing. Assumptions relating to budgeting,
marketing, product development and other management decisions are subjective in
many respects and thus susceptible to interpretations and periodic revisions
based on actual experience and business developments, the impact of which may
cause the Company to alter its capital expenditure or other budgets, which may
in turn affect the Company's financial position and results of operations.





<PAGE>




Part II - Other Information

      Item 1.    Legal Proceedings

                 No change from previous filing.

      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

                 Form 8-K dated May 17, 1999

<PAGE>





                                   SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

                                       Q-Med, Inc.




                                       By:_______________________________
                                       Michael W. Cox
                                       President
                                       Principal Executive and
                                       Financial Officer



Dated:  June 10, 1999