FORM 10-K

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

              ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended: November 30, 1999

Commission File Number:  0-11411

                                   Q-MED, INC.
             (Exact Name of Registrant 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)

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

Securities registered pursuant to Section 12 (b) of the Act:  None
Securities registered pursuant to
   Section 12 (g) of the Act:  Common Stock, $.001 par value

      Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements by
reference in Part III of this Form 10-K or any amendment to the Form 10-K. [_]

      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 [_]

      As of February 18, 2000, the aggregate value of the registrant's voting
stock held by non-affiliates was $85,794,405 (computed by multiplying the last
reported sale price on February 18, 2000 by the number of shares of common stock
held by persons other than officers, directors or by record holders of 10% or
more of the registrant's outstanding common stock. This characterization of
officers, directors and 10% or more beneficial owners as affiliates is for
purposes of computation only and is not an admission for any purposes that such
person are affiliates of the registrant).


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      As of February 18, 2000, there were 12,264,781 shares of the registrant's
common stock, $.001 par value, issued and outstanding.

      Documents incorporated by reference:

      Document                                        Form 10-K Reference
      --------                                        -------------------

      Portions of the Registrant's Proxy                     III
      Statement for its 2000 Annual Meeting
      (to be filed in definitive form within
      120 days of the Registrant's Fiscal
      Year End)


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                                     PART I

ITEM 1. BUSINESS

Forward-Looking Statements

      Certain matters discussed herein may constitute forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995 and
as such may involve risks and uncertainties. In this report, the words
"anticipates," "believes," "expects," "intends," "future" and similar
expressions identify certain forward-looking statements. These forward-looking
statements relate to, among other things, expectations of the business
environment in which the Company operates, projections of future performance,
perceived opportunities in the market and statements regarding the Company's
mission and vision. The Company's actual results, performance, or achievements
may differ significantly from the results, performance, or achievements
expressed or implied in such forward-looking statements. For discussion of the
factors that might cause such a difference, see "Item 7. Management's Discussion
and Analysis of Financial Condition and Results of Operations."

General

      Q-Med, Inc. (the "Company") is a Delaware corporation and is the successor
by merger to the business of a New Jersey corporation organized on February 1,
1983. The Company engages in the development, manufacture, marketing and sale of
advanced medical devices and systems. The Company, through Interactive Heart
Management Corp. ("IHMC"), a subsidiary founded during the year ended November
30, 1995 ("fiscal 1995"), developed and is marketing an integrated coronary
artery disease management system under the name "ohms|cad(R)" to assist health
maintenance organizations manage the cost of coronary artery disease ("CAD").
The Company also produces and sells high quality medical systems that provide
reliable diagnostic interpretation of certain disease states, including a line
of ambulatory ischemic heart monitors, an interpretative electrocardiographs, a
system for the analysis of heart rate variability and a system for the
measurement of venous blood flow. These systems are designed to address the
needs of primary health care physicians to appropriately manage certain diseases
cost effectively. The Company's products and services are uniquely suited to
assist primary health care physicians in discharging the greater medical
responsibilities that are expected to be placed on them, as efforts are made to
reduce the overall cost of health care. Each of the Company's present products,
and those which are under development by the Company as well as products
employing selectively acquired technology developed by others, are designed to
provide sophisticated analysis of physiological data in near or real-time and
report these analytical results to the primary care physician in order to detect
and manage early signs of potentially acute diseases. These technologically
advanced diagnostic tools lead to early detection and treatment thereby
facilitating cost-effective management of disease by a primary care physician
rather than disease management in an expensive acute care facility, such as a
hospital.

      Utilizing the experience obtained through various drug trials with such
pharmaceutical companies as Pfizer, Ciba Geigy, ICI and others and the extensive
validations completed on


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"Monitor One(R)" instruments, the Company developed a comprehensive, disease
management system for the coronary artery disease ("CAD") patient which is
marketed under the trade name ohms|cad by the Company's IHMC subsidiary. This
system consists of Monitor One STRx ambulant ischemic technology; a remote
on-line diagnostic center (The ohms Center); and an integrated cardiology
consultant practice. This entire system non-invasively and reliably quantifies
the probable risk of a heart attack, unstable angina and death and directs the
patient to appropriate therapy with the emphasis throughout on early detection,
prevention of cardiac events, the modification of risk-factors and the
appropriate medicine. Early detection and treatment with emphasis on medical
intervention results in an overall lowering of the cost of CAD care and the
improvement in patient health thereby reducing mortality and morbidity rates in
populations having CAD.

      The Company is exploring alliances with other companies which are seeking
to provide disease management services in an effort to provide more
comprehensive monitoring and permit the management of a wider range of
conditions that are related to CAD. The Company expects that such alliances will
permit the Company to tailor disease management solutions for the needs of
various managed care organizations. In addition, the Company is developing
internet based solutions for the management of CAD. The Company believes it is
well positioned to exploit the growing market for internet based health care
solutions for managed care organizations, physicians and the patient as a result
of its leadership in the development and implementation of on-line CAD
management systems.

      The Company has also developed and is marketing an electronic medical
device under the name, Monitor One nDx(R) ("nDx") which analyzes heart rate
variability. The loss of variation in heart rate may assist the physician in
making a diagnosis and determining the severity of autonomic neuropathy.
Autonomic neuropathy, a deterioration of the autonomic nervous system, is
associated with diabetic patients which may lead to complications in the
functioning of the heart, respiratory systems, digestion, body temperature,
metabolism, perspiration and the secretion of certain endocrine glands.

      The Company's executive offices are located at 100 Metro Park South,
Laurence Harbor, New Jersey 08878 and its telephone number is (732) 566-2666.

ohms|cad System

      ohms|cad is IHMC's proprietary "On-line Health Management Service for
Coronary Artery Disease". It is a telecommunications system designed as a total
disease management process for CAD. It consists of Monitor One STRx, IHMC's
Monitor One ambulant ischemia technology, a remote on-line diagnostic center
(The ohms Center), and an integrated cardiology consultant practice. The entire
system noninvasively and reliably quantifies the probable risk of a heart
attack, unstable angina and death and rationally directs the patient to
appropriate therapy with the accent on early detection, the modification of
critical risk-factors and medical intervention.


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      The overall system operates as an "expert system" emphasizing best medical
treatment options for myocardial ischemia and continued coronary wellness. The
system is an evidence based, relational mechanism, using coronary artery disease
patient descriptors which include: demographics, medical history, current
medical therapy, including aspirin, lipid and hypertension profiles, obesity and
life style, smoking, glucose levels and ambulant ischemia in its decision
making.

      In addition, each individual patient's demographics and risk profiles are
simultaneously entered into the ohms|cad database for primary and secondary
prevention analysis and treatment. Recommendations for management are relational
and tailored to an individual patient for ambulant ischemia, silent heart
disease, lipid and hypertension, antithrombosis, smoking, exercise, obesity and
diabetes.

      Because of centralized, digital storage of all data, it allows for the
continuous description and analysis of quantifiable results; success of the
stratification, proportion of patients assigned to various therapies, objective
outcomes, interplay with pharmaceutical and pharmacy benefit managers and
physician and patient compliance.

      For example, in its risk prevention mode (myocardial infarction, unstable
angina, sudden death), it centers on the presence or absence of ambulant
ischemia as a risk stratifier utilizing our specialized non-invasive STRx
technology for evaluation of this phenomena in each patient. This test data is
telecommunicated to the Company's ohms|cad database (The ohms Center), which in
turn stratifies each individual patient into high or low risk. It then proposes
to lower patient risk with specific anti-ischemic medical therapies as one
treatment option, or, if necessary, recommends further local cardiology
consultation leading to possible invasive intervention. If the data indicate
that the patient is at low risk, a message is sent back to the primary care
physician site within minutes with recommendations for optimization of medical
therapy which will maintain the patient in the low-risk pool. In both
circumstances, therapeutic actions are guided by IHMC's proprietary disease
management algorithm which in turn is based on national practice guidelines. All
of the interactions and data are stored in the ohms|cad diagnostic center, thus,
outcome information is available continuously.

      Because ohms|cad is an active disease management process emphasizing a
continuum of care, derived from early detection of ambulant ischemia and
modification of patient risk factors, similar cost effective improvements in
cardiac events can be expected from its use. The ohms|cad system continually
monitors the care process at the primary care level, thus, results are reported
as outcomes. Favorable outcomes increase market share, decrease economic risk
and increase product differentiation for the managed care organization. As a
result, the early implementation of ohms|cad should contribute to significant
savings and patient gains in market share.

      The results of the utilization of ohms|cad to manage CAD patients was the
subject of a presentation at the Scientific Section of the American Heart
Association's Annual Meeting in November 1997. The results showed significant
health benefits for those patients undergoing ohms|cad management as compared to
patients receiving usual care.


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Ambulatory Ischemic Heart Disease Monitoring

      While ambulatory monitoring for arrhythmias was first introduced in the
early 1960's and has been broadly used in medical practice as a diagnostic
monitoring system useful to detect rhythm and rate disturbances of the heart, no
company had developed a novel application using solid-state electronics and a
validated ischemia analysis program to evaluate the presence and duration of
ambulatory ischemic heart disease (Monitor One). Thus, the medical utility of
Monitor One allows the detection and analysis of reduced coronary artery blood
flow during a patient's daily routines (Ambulant Ischemic Heart Disease). Such
analysis can result in the early prevention of heart attack, unstable angina and
death. In addition, silent heart disease which is prevalent in coronary artery
disease patients and diabetics, may also be detected and evaluated by the
Monitor One technology. The basic design of Monitor One to accomplish this
special function, utilizes an on-board microprocessor and an extensively
clinically validated algorithm to analyze ischemic ECG signals and distinguish
between normal and abnormal heart beats as the patient is wearing the device
throughout their normal daily routines. Heightened recognition that ischemic
episodes are predominantly silent and prognosticate morbid cardiac events such
as heart attacks, sudden death and unstable angina prompted the Company to
develop the Monitor One technology.

      The Company's Monitor One systems utilize technology which detects changes
in the ECG signal which may be associated with diseases of the heart. Monitor
One systems store analyzed ECG wave forms, statistical data, produce printed
reports and can transmit data either directly to a printer or over telephone
lines or to a personal computer for physician analysis, interpretation and
ischemic intervention. The Company's Monitor One, which may be worn on a belt or
carried in the patient's pocket, is capable of interpreting a wide variety of
ECG signals which may be associated with cardiac conditions. Monitor One
technology has been independently validated in controlled research studies for
the detection of ischemic episodes associated with coronary ST-segment
deviations in patients with diagnosed CAD.

      Each Monitor One system is a computerized monitor with five high-fidelity
electrodes which are either disposable or reusable and attached to the monitor
through a single connector. The reusable electrodes were originally developed by
the National Aeronautics and Space Administration ("NASA"). Monitoring for
periods of greater than 24 hours is possible due to solid-state memory and the
design of the reusable electrodes, which allows high-fidelity signal capture
without the need for daily replacement of disposable electrodes. The United
States Patent Office abstract (No. 3,420,223) for the reusable electrode system
reports that the electrodes can be used continuously for 28 days without
appreciable deterioration of the electrodes or irritation of the wearer. In
practice, the reusable electrode system (which includes a plastic casing and
attached wiring) is subjected to physical abuse in its application and removal
from the patients' chests following a 24 hour monitoring session. Based upon the
Company's experience to date, it appears that the reusable electrode system has
an average life of six months. The Company offers extended one, two and
three-year warranties, at an additional cost to the purchaser, which includes
the cost of one set of replacement reusable electrodes for each year. The
monitor retains all information stored in a non-volatile memory driven by a
lithium battery during battery pack replacement or if the monitor is turned off
for a minimum of one year. In addition, the monitors


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indicate, by audible tone and liquid crystal display ("LCD"), when battery
replacement is required.

Additional Products

      The Company developed and is marketing a diagnostic device that analyzes
heart rate variability which can provide the physician information on the
functioning of the Autonomic Nervous System ("ANS"). ANS dysfunction is the
failure of the portion of the body's nervous system to regulate such unconscious
functions as respiration, circulation, digestion, heart-rate, body temperatures,
metabolism, sweating and certain glandular secretions. These symptoms are
associated with serious complications of diabetes leading to blindness, kidney
failure, and may contribute to diabetic cardiac autonomic neuropathy, often
associated with silent heart disease, heart attacks and sudden cardiac death.
The Company's Monitor One nDx system ("nDx") automates the analysis of heart
rate variation during deep inspiration and forced expiration, posture changes
and Valsalva Maneuvers. The nDx monitor assists the physician in administering
the test by prompting the patient's breathing patterns and then providing a
statistical analysis. The Company believes that this product can assist
physicians in the early detection of neurological disorders related to diabetes,
before other more dangerous symptoms (heart attacks, blindness, impotence, etc.)
are present and to help manage the treatment of their diagnosed diabetic
patients. The Company received a U.S. patent for the nDx technology on March 29,
1994 (Patent No. 5299119).

Marketing

      The Company directly markets its ohms|cad service to health maintenance
organizations, large physician practice groups and similar managed care
organizations through its sales staff. Marketing efforts are conducted and
coordinated by the Company's President and other senior management personnel,
and with the aid, where appropriate, of certain independent consultants. In
addition, the Company generally pursues business opportunities through the
traditional competitive process where a Request for Proposals ("RFP") or a
Request for Qualifications ("RFQ") is issued by a managed care organization,
with a number of companies responding and receives unsolicited requests for
proposals. The Company utilizes demographic and cost of service data from the
managed care provider and statistical information concerning the cost savings
that can be realized by utilizing the ohms|CAD system to conduct an initial cost
analysis to further determine program feasibility . As part of the Company's
sales efforts, management meets with appropriate personnel from the managed care
organization making the request to best determine the organization's needs. A
typical RFP requires bidders to provide detailed information, including the
service to be provided by the bidder, its experience and qualification and the
price at which the bidder is willing to provide the services. The Company
sometimes engages independent consultants to assist it in responding to RFPs.
Based on the proposals received in response to an RFP, the agency will award a
contract to the successful bidder. In addition to issuing formal RFPs, some
managed care organizations may issue an RFQ. In the RFQ process, the requesting
agency selects a firm believed to be most qualified to provide the requested
services and then negotiates the terms of the contract with that firm, including
the price


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at which its services are to be provided. The Company also attends and promotes
its services at key conferences throughout the United States where potential
clients are present.

      The marketing and sales of the Company's devices to primary care
physicians, hospitals and other health care providers are conducted through
distributors.

Warranty

      The Company extends end-users of purchased or leased devices a standard
warranty and, at additional cost to the end-user, extended one-year to
three-year warranties. Extended warranty sales represented 16.1% and 13.5% of
net sales for fiscal 1999 and 1998, respectively. If there has been equipment
malfunction, the Company's warranty provides for the repair or replacement of
the equipment. The average unit cost of repair is minimal. During fiscal 1999
and 1998, the Company replaced three and two monitors respectively that could
not be repaired pursuant to its warranty programs.

Reimbursement Policies

      The Medicare program is a major payment source for procedures utilizing
the Company's products. The Medicare program is administered by the federal
government through the Health Care Financing Administration ("HCFA"), United
States Department of Health and Human Services. Medicare carriers, typically
private insurance companies, acting as agents of the government, operate under
contract with HCFA to implement Medicare program policies and process claims in
assigned geographic areas. Consequently, reimbursement rates for the same
services may vary by geographic area.

      On January 1, 1992, a Medicare physician payment system became effective
which is designated "Resource Based Relative Value Scales" ("RBRVS"). RBRVS,
which is administered by the Health Care Financing Administration, and replaced
the "reasonable charge" system which was utilized since 1965. The reasonable
charge system was criticized because it resulted in wide variations in the
reimbursement payments for the same services performed by physicians of
different specialties and geographic locations. The RBRVS system, which is to be
phased in over five years, is intended to provide uniform reimbursement for the
performance of a service, regardless of the specialty of the physician
performing the service. The Company's analysis of the system concludes that the
RBRVS system seeks to lower overall costs of the delivery of medical care by
rewarding more patient management provided by primary care physicians.

      Although the RBRVS system described above is mandated by Congressional
action, there can be no assurance that future Congressional action will not
result in the general reduction in the rates of reimbursement. Nevertheless, the
1995 RBRVS rates for the Company's products were increased between 3-5%. While
uncertainty relating to the Medicare classification of electronic ambulatory
cardiac monitors was resolved by HCFA in October 1988 and adopted by carriers
during fiscal 1989, the Company believes that the overall political climate to
reduce fees for all medical services has a negative impact on medical equipment
sales in general and, therefore, equipment sales by the Company. In addition,
uncertainties created by proposals to reform the


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health care delivery system, in general, created, in the Company's opinion, an
environment in which many physicians delay their decisions with respect to
expenditures for capital equipment. Accordingly, the Company expects that this
trend had an adverse impact on its equipment sales. The Company also believes
that its experience in designing and marketing equipment that offers high
quality results which are medically necessary and cost-effective, places it in a
position to exploit the evolving managed health care and large practice group
market which is consistent with efforts to lower overall health care costs. See
"Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations."

Principal Customers

      During fiscal 1999, 1998 and 1997 one customer accounted for 21%, 15% and
18% of net sales respectively.

Manufacturing

      The Company contracts with electronics companies for the manufacture and
sub-assembly of its products and accessories, as well as certain components of
its devices and provides these companies with technical expertise. Products
undergo final testing and packaging at the Company's engineering facility
located in Sag Harbor, New York. Although the Company has not experienced
significant delays or disruptions in the assembly and delivery of its products,
there can be no assurance that delays or disruptions will not occur in the
future. A deterioration of the Company's relationship with its independent
contract manufacturers could subject the Company to substantial delays in the
delivery of its products to customers. Such delays would subject the Company to
possible cancellation of orders and the loss of certain customers.

      Whenever possible, the Company uses multiple sources of supply for its
components. However, the Company believes that there are only singular sources
of supply for certain components of its products. There is no assurance that
these sources will continue to supply those parts and, if they become
unavailable, the Company would be adversely affected. Also, there can be no
assurance that the Company's contract manufacturers will maintain an acceptable
level of quality and capability for assembling the products to the Company's
specifications. The Company has not experienced delays in obtaining supplies
which affected the Company's ability to deliver finished goods.

Competition

      ohms|cad is a unique solution for CAD management. However, there are
several CAD management companies, including pharmaceutical companies, pharmacy
benefit managers and independent vendors that are pursuing CAD management that
could be considered competition.

      To the Company's knowledge, none of these companies deal with CAD
comprehensively. Most have designed their programs to respond to a cardiac
event, essentially waiting for a patient to have a heart attack or procedure and
follow with post-hospitalization case


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management. In addition, manufacturers of drugs that reduce cholesterol have
designed programs based on high blood lipids and have developed protocols to
emphasize the use of their drug(s). To the Company's knowledge, ohms|cad is the
only operating disease management system that includes primary and secondary
prevention; risk stratifies the patients into those who are and who are not in
danger of adverse events in the near term and reduces practice variation and
referrals. No other CAD management program has shown comparable results with
beneficial patient outcomes that lowered overall CAD healthcare costs.

      The Company believes it has competitive advantages based on the following:

      o     The entire management system and its components are proprietary and
            patented: STRx is covered by U.S. Pat. #4679144 and ohms|cad by U.S.
            Pat. #5724580.

      o     Clinically validated digital ischemia technology.

      o     Documented outcomes presented at American Heart Association
            Scientific Sessions.

      o     Extensive and growing database of how specific therapeutic
            modalities affect patients.

      o     1,000 patient-per-day system throughput capability.

      o     Proven success in implementing a CAD disease management system in
            the field that leads to a faster rollout and faster health and
            economic outcomes to the plan.

      o     Proprietary analytics to define the target population at risk.

      o     Established infrastructure with integrated resources and processes
            amplified by corporate expertise.

      Competition may increase and such competition could come from companies
that are considerably larger and have greater financial and marketing resources
than the Company.

      Monitor One ischemia products compete primarily with ambulatory arrhythmia
ECG scanning services, of which there are more than 75 in the United States, and
other ambulatory ECG monitoring equipment manufacturers. The Company is aware of
more than 20 ambulatory ECG monitoring equipment manufacturers of which five
manufacture digital systems. Certain large medical equipment companies such as
Hewlett Packard and Marquette Electronics have introduced electronic ambulatory
monitors which compete directly with those of the Company. These companies have
substantially greater marketing, financial and other resources than those of the
Company but management believes that the Company's products' price and
performance are competitive in this field.


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      The Company believes that Monitor One ischemia monitoring products offer
certain advantages over traditional ambulatory arrthymia ECG recording monitors
and scanning services. Monitor One products can provide continuous analysis and
quantification of ambulant ischemia in real-time as well as other irregularities
of the ECG signal for a period of time longer than 24 hours and have a
programmable feature which enables them to emit an audible tone during the
occurrence of certain high-risk ischemic episodes. These characteristics permit
the use of Monitor One products for the monitoring and regulation of drug
therapy and as a possible warning device for impending ischemic heart attacks.

      The Company's sales of Interp 1000 EKG systems is not significant in the
market for such devices. The market is dominated by companies such as Burdick,
Hewlett Packard and Marquette Electronics, which have far greater financial,
marketing and other resources than those of the Company. The Company believes
that its Interp 1000 product offers certain advantages, particularly its
validated accuracy, compact size, portability and pricing.

      The Company is not aware of any commercial product which competes with it
nDx system which automates the process of testing for autonomic dysfunction nor
is it aware of any comprehensive CAD management system which competes with
ohms|cad.

      The Company believes that direct competition in ambulatory ischemic
monitors; products for testing autonomic function; and interpretive ECG may, in
the future, come from companies that are considerably larger and have greater
financial and human resources and marketing capabilities. Primary competitive
factors in the medical device industry include scientific and technological
superiority, price, service, product support, availability of patent protection,
access to adequate capital, the ability to successfully develop and market
products and processes.

Research and Development

      In fiscal 1999, 1998, and 1997, the Company expended $571,449, $486,843
and $551,681 respectively, for research and development. During these years,
research and development was primarily focused on the development of an advanced
version of the ohms|cad system.

      Management expects to continue to develop new products, as well as enhance
its existing products and has budgeted approximately 10% of anticipated revenue
for such product development in fiscal 2000.

Patent Protection and Proprietary Information

      The Company maintains a policy of seeking patent protection in the United
States and other countries in connection with certain elements of its technology
when it believes that such protection will benefit the Company. The Company's
Monitor One technology has been granted patents in the United States (Patent No.
4679144), Canada (No. 1281081) and Spain (No. 547040) and has additional patent
applications pending in other countries. The Company received a U.S. patent for
the nDx technology on March 29, 1994 (Patent No. 5299119) and a


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patent for the ohms|cad system (Patent No. 5,724,580) on March 3, 1998. Certain
patents relating to the Company's technology begin expiring in 2004.

      The patent laws of foreign countries may differ from those of the United
States as to the patentability of the Company's products and, accordingly, the
degree of protection afforded by the pendency or issuance of foreign patents may
be different than protection afforded under associated United States patents.
There can be no assurance that patents will be obtained in foreign jurisdictions
with respect to the Company's products or that the United States patent and any
foreign patents will significantly protect or commercially benefit the Company.

      The Company does not intend to rely solely on patent protection for its
proprietary technology. The Company also relies upon confidentiality agreements
with employees, know-how, expertise and lead-time to attain and maintain its
competitive position, and to the extent it does so, there can be no assurance
that others may not independently develop similar technology or that secrecy
will not be breached.

Governmental Regulation

      The Company's products, to the extent they may be deemed "medical
devices," are regulated by the Food and Drug Administration (the "FDA") under
the Federal Food, Drug and Cosmetics Act (the "FDCA") and regulations
promulgated thereunder.

      All medical devices sold in interstate commerce are subject to FDA
clearance. The Company's products are subject to pre-market notification
(510(k)), pursuant to which the FDA determines whether a new medical product is
"substantially equivalent" to a product that was on the market prior to May 28,
1976. Products found to be "substantially equivalent" to those products may
thereafter be sold. The FDA has the authority, which it has not yet exercised,
to issue performance standards for the type of products manufactured by the
Company.

      Regulations of the FDA known as Good Manufacturing Practices ("GMP")
provide standards for manufacturing processes, facilities, and record-keeping
requirements with which the Company and its contract manufacturers must also
comply. The Company believes that the manufacturing and quality control
procedures employed by it and its contract manufacturers meet the GMP
requirements. If the FDA should determine that the Company's products were not
manufactured in accordance with GMP's, it has the authority to order the Company
to cease production of its products and may require the Company to recall
products already sold by the Company. In addition, any facilities used to
manufacture or assemble the Company's products will be subject to inspection by
the FDA at least biannually.

      The FDCA is not the exclusive source of regulation of medical devices and,
by its terms, allows state and local authorities to adopt more stringent
regulations for medical devices.

      The Health Insurance Portability and Accountability Act of 1996 mandates
the use of standard transactions, standard identifiers, security and other
provisions by the year 2000. Regulations have been proposed to implement these
requirements, and we are designing our


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applications to comply with the proposed regulations. However, until these
regulations become final, possible changes in these regulations could cause us
to use additional resources and lead to delays as we revise our operations.

      To our knowledge and other than what we have described in this statement
and other than occupational health and safety laws and labor laws which are
generally applicable to most companies, our products are not subject to
governmental regulation by any federal, state or local agencies that would
affect the manufacture, sale or use of our products. We cannot, of course,
predict what sort of regulations of this type may be imposed in the future, but
we do not anticipate any unusual difficulties in complying with governmental
regulations which may be adopted in the future.

Employees

      The Company, as of January 31, 2000, had 31 full time employees. Of these
full time employees, 3 were executives, 4 were engaged in sales supervisory
capacities, 3 in marketing, 6 in product development, 2 in production, 5 in
technical support, 4 on-site coordinators and 4 in office administration. None
of the Company's employees are covered by a collective bargaining agreement. The
Company believes its relations with employees are good.

Item 2. Properties.

      The Company's executive offices occupy approximately 9,000 square feet of
office space in Laurence Harbor, New Jersey. These facilities are used
principally for administrative offices, sales training, and marketing. In
addition, the Company leases approximately 6,000 square feet of space in Sag
Harbor, New York used principally for research and development, assembly and
quality control. Management believes that the foregoing facilities are adequate
for the Company's current level of operations.

Item 3. Legal Proceedings.

      The Company is subject to claims and legal proceedings covering a wide
range of matters that arise in the ordinary course of business. It is
management's opinion that the ultimate resolution of these matters will not have
a material effect on the Company's consolidated financial position and results
of operations.

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

      The Company's Annual Meeting of Stockholders was held on October 4, 1999,
pursuant to written notice and the Company's bylaws. The total number of the
Company's shares outstanding on September 30, 1999, the record date of the
meeting, was 12,238,781 of which 11,011,781 were present, in person or by proxy.
The following persons were nominated by management and each was elected to serve
as director until the next annual meeting of stockholders:


                                       13
<PAGE>

            Michael W. Cox
            David Feldman
            Richard I. Levin
            Robert A. Burns
            A. Bruce Campbell
            Herbert H. Sommer

      The following matters were submitted to stockholders and adopted by the
requisite vote of a majority of the shares present and voting on the matter:

                                             For         Against      Abstain

      To approve the Company's
        1999 Equity Incentive Plan        5,151,210      169,129       24,498

      To ratify the selection of
        Auditors                         10,985,278       17,275        6,100

      A proposal to amend the Company's certificate of incorporation to
authorize a class of "blank check" preferred stock was not passed by the
requisite vote of a majority of the shares issued and outstanding as follows:

                                             For         Against     Abstain

      To amend the Company's
        Certificate of Incorporation      5,507,019      280,397      7,150


                                       14
<PAGE>

                                     PART II

Item 5. Market for the Registrant's Common Stock and Related Security Holder
        Matters.

      Market for the Registrant's Common Stock and related stockholder matters
as set forth on page 29 of the Registrant's 1999 Annual Report to Stockholders
is incorporated herein by reference.

Item 6. Selected Financial Data.

      Selected financial data as set forth on page 7 of the Registrant's 1999
Annual Report to Stockholders is incorporated herein by reference.

Item 7. Management's Discussion and Analysis of Financial Condition and Results
        of Operations.

      Management's discussion and analysis of financial condition and results of
operations as set forth on pages 8 to 13 of the Registrant's 1999 Annual Report
to Stockholders is incorporated herein by reference.

Item 7A.  Quantitative and Qualitative Disclosures about Market Risk.

      Not applicable.

Item 8. Financial Statements and Supplementary Data.

      Financial statements and supplementary data as set forth on pages 14 to 28
of the Registrant's 1999 Annual Report to Stockholders is incorporated herein by
reference.

Item 9. Disagreements on Accounting and Financial Disclosure.

      None.


                                       15
<PAGE>

                                    PART III

Item 10. Directors, Executive Officers, Promoters, Control Persons and
         Compliance with Section 16(a) of the Exchange Act of the Registrant.

      Information with respect to executive officers and directors of the
Company will be set forth in the Company's definitive proxy statement which is
expected to be filed within 120 days of November 30, 1999 and is incorporated
herein by reference.

Item 11. Executive Compensation.

      Information with respect to executive compensation will be set forth in
the Company's definitive proxy statement which is expected to be filed within
120 days of November 30, 1999 and is incorporated herein by reference.

Item 12. Security Ownership of Certain Beneficial Owners and Management.

      Information with respect to the ownership of the Company's securities by
certain persons will be set forth in the Company's definitive proxy statement
which is expected to be filed within 120 days of November 30, 1999 and is
incorporated herein by reference.

Item 13. Certain Relationships and Related Transactions.

       Information with respect to transactions with management and others will
be set forth in the Company's definitive proxy statement which is expected to be
filed within 120 days of November 30, 1999 and is incorporated herein by
reference.


                                       16
<PAGE>

                                     PART IV

Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.

      (a) (1) Financial Statements.

      Description

      Independent Auditors Report

      Consolidated Balance Sheets as of November 30, 1999 and
      1998

      Consolidated Statement of Operations for each of the three years ended
      November 30, 1999, 1998 and 1997

      Consolidated Statement of Stockholder's Equity for each of the three years
      ended November 30, 1999, 1998 and 1997

      Consolidated Statement of Cash Flow for each of the three years ended
      November 30, 1999, 1998 and 1997

      Notes to Consolidated Financial Statements

      (2) Financial Statement Schedules

      Schedules have been omitted because they are not applicable.

      (b)  Reports on Form 8-K.

      None.

      (c) The following Exhibits are filed as part of this report. Where such
filing is made by incorporation by reference (I/B/R) to a previously filed
statement or report, such statement or report is identified in parentheses:


                                       17
<PAGE>

Official                                                        Sequential
Exhibit No.                 Description                         Page No.
-----------                 -----------                         --------


    2             None

    3.1           Amended and restated New Jersey
                  Certificate of Incorporation dated July
                  6, 1983 (Exhibit 3C to the S-18
                  Registration Statement 2-86653-NY of the
                  Company effective December 1, 1983)           I/B/R

    3.2           New Jersey By-Laws as amended on January
                  16, 1984 (Exhibit 3F to the Company's
                  Annual Report on Form 10-K for the year
                  ending November 30, 1984)                     I/B/R

    3.3           Amended and Restated Delaware
                  Certificate of Incorporation of Q-Med,
                  Inc. as in effect on July 11, 1987
                  (Exhibit 3.3 to the Company's Report on
                  Form 10-Q dated May 31, 1987)                 I/B/R

    3.4           By-Laws as in effect on July 1, 1987
                  (Exhibit 3.3 to the Company's Report on
                  Form 10-Q dated May 31, 1987)                 I/B/R

    3.5           Amendment to By-Laws dated December 18,
                  1997 Exhibit 3.5 to the Company's Form
                  10-K Report dated November 30, 1997)          I/B/R

    4.1           Specimen of Stock Certificate (Exhibit
                  4.1 to the Company's Report on Form 10-K
                  dated November 30, 1989)                      I/B/R

    4.2           Note Purchase Agreement between Q-Med,
                  Inc. and Galen Partners III, L.P., Galen
                  Partners International III, L.P., Galen
                  Employee Fund III, L.P. dated as of
                  December 18, 1997 (Exhibit 4.1 to the
                  Company's Report on Form 8-K dated
                  December 18, 1997)                            I/B/R

    4.3           Registration Rights Agreement between
                  Q-Med, Inc. and Galen Partners III,
                  L.P., Galen Partners International III,
                  L.P., and Galen Employee Fund III, L.P.
                  dated as of December 18, 1997 (Exhibit
                  4.3 to the Company's report on Form 8-K
                  dated December 18, 1997)                      I/B/R


                                       18
<PAGE>

    4.4           Form of 16% Convertible Subordinated
                  Note (Exhibit 99.2 to the Company's
                  report on Form 8-K dated November 16,
                  1998)                                         I/B/R

    4.5           Form of Warrant Agreement dated November
                  16, 1998 (Exhibit 99.6 to the Company's
                  report on Form 8-K dated November 16,
                  1998)                                         I/B/R

    4.6           Form of common stock purchase warrants
                  exercisable at $1.67 per share until
                  November 15, 2005 (Exhibit 4.1 to the
                  Company's report on Form 8-K dated May
                  17, 1999)                                     I/B/R

    4.7           Form of common stock purchase warrants
                  exercisable at $2.87 per share until
                  November 15, 2005 (Exhibit 4.2 to the
                  Company's report on Form 8-K dated May
                  17, 1999)                                     I/B/R

    4.8           Form of common stock purchase warrants
                  exercisable at $2.625 per share until
                  November 15, 2005 (Exhibit 4.2 to the
                  Company's report on Form 8-K dated
                  August 25, 1999)                              I/B/R

    9.1           Form of Shareholder and Voting Rights
                  Agreement between the Company and
                  several stockholders dated as of
                  November 16, 1998 (Exhibit 99.4 to the
                  Company's report on Form 8-K dated
                  November 16, 1998)                            I/B/R

    10.1          Q-Med, Inc. 1986 Incentive Stock Option
                  Plan (Exhibit 10N to the Company's
                  Registration Statement No. 33-4499 on
                  Form S-1)                                     I/B/R

    10.2          Lease dated August 31, 1993 between the
                  Company and Alexandria Atrium Associates
                  (Exhibit 28.1 to the Company's Form
                  10-QSB Report dated August 31, 1993)          I/B/R

    10.3          Securities Purchase Agreement dated May
                  6, 1996 between Q-Med, Inc. and S.R. One
                  Limited (Exhibit 10.9 to the Company's
                  Form 10-K Report dated November 30,
                  1996, as amended)                             I/B/R


                                       19
<PAGE>

    10.4          Registration Rights Agreement dated May
                  6, 1996 between Q-Med, Inc. and S.R. One
                  Limited (Exhibit 10.10 to the Company's
                  Form 10-K Report dated November 30,
                  1996, as amended)                             I/B/R

    10.5          Q-Med, Inc. 1997 Equity Incentive Plan
                  (Exhibit 10.11 to the Company's Form
                  10-K Report dated November 30, 1998)          I/B/R

    10.6          Amendment dated as of November 15, 1998
                  to Note Purchase Agreement between
                  Q-Med, Inc. and Galen Partners III,
                  L.P., Galen Partners International III,
                  L.P., Galen Employee Fund III, L.P.
                  dated as of December 18, 1997 (Exhibit
                  99.1 to the Company's report on Form 8-K
                  dated November 16, 1998)                      I/B/R

    10.7          Form of Registration Rights Agreement
                  between Q-Med, Inc. and several
                  stockholders dated as of November 15,
                  1998 (Exhibit 99.3 to the Company's
                  report on Form 8-K dated November 16,
                  1998)                                         I/B/R

    10.8          Form of Option Agreement between the
                  Company and several stockholders dated
                  as of November 16, 1998 (Exhibit 99.5 to
                  the Company's report on Form 8-K dated
                  November 15, 1998)                            I/B/R

    10.09         Amendment dated December 16, 1998 to
                  Employment Agreement between the Company
                  and Michael W. Cox (Exhibit 10.11 to the
                  Company's Form 10-K for year ended
                  November 30, 1998)                            I/B/R

    10.10         Amendment of option agreement dated May
                  17, 1999 (Exhibit 99.1 to the Company's
                  report on Form 8-K dated May 17, 1999)        I/B/R

    10.11         Second Amendment dated as of August 25,
                  1999 to Note Purchase Agreement between
                  qmed, Inc. and Galen Partners III, L.P.,
                  Galen Partners International III, L.P.,
                  Galen Employee Fund III, L.P. dated as
                  of December 18, 1997 (Exhibit 99.1 to
                  the Company's report on Form 8-K dated
                  August 25, 1999)                              I/B/R


                                       20
<PAGE>

    10.12         Securities Purchase Agreement between
                  qmed, Inc. and Galen Partners III, L.P.,
                  Galen Partners International III, L.P.,
                  Galen Employee Fund III, L.P. dated as
                  of August 25, 1999 (Exhibit 99.2 to the
                  Company's report on Form 8-K dated
                  August 25, 1999)                              I/B/R

    10.13         Qmed, Inc. 1999 Equity Incentive Plan
                  (Exhibit 4.1 to the Company's
                  Registration Statement on Form S-8
                  (333-93697) filed December 28, 1999)          I/B/R

    11            None

    13*           Q-Med, Inc. 1999 Annual Report.

    16            None.

    18            None.

    20.1          Notice of consent requested and given to
                  award certain option agreements (Exhibit
                  20.1 to the Company's report on Form 8-K
                  dated May 17, 1999)                           I/B/R

    21*           Subsidiaries of Registrant

    22            None.

    23*           Consent of Amper, Politziner & Mattia

    24            None.

    27*           Financial Data Schedule

-------

*  Filed herewith

** Exhibit omits certain information which the Company has filed separately with
the Commission pursuant to a confidential treatment request under Rule 24b-2
under the Securities Exchange Act of 1934, as amended.


                                       21
<PAGE>

                                   SIGNATURES

      Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed by
the undersigned, thereunto duly authorized.

Dated: February 25, 2000               Q-MED, INC.


                                        By: /s/ Michael W. Cox
                                            ------------------------------------
                                            Michael W. Cox, President

      Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed on behalf of the Registrant and in capacities and at the
dates indicated:

Signature                             Capacity                      Date


/s/ Michael W. Cox            President and Treasurer        February 25, 2000
------------------------      (Principal Executive and
Michael W. Cox                Financial Officer)


/s/ Richard I. Levin          Director                       February 25, 2000
------------------------
Richard I. Levin


/s/ Robert A. Burns           Director                       February 25, 2000
------------------------
Robert A. Burns


/s/ David Feldman             Director                       February 25, 2000
------------------------
David Feldman


/s/ Herbert H. Sommer         Director                       February 25, 2000
------------------------
Herbert H. Sommer


/s/ A. Bruce Campbell         Director                       February 25, 2000
------------------------
A. Bruce Campbell


/s/ Debra A. Fenton           Controller                     February 25, 2000
------------------------
Debra A. Fenton



                                       22
<PAGE>

                                  EXHIBIT INDEX

Exhibit                                                          Sequential
  No.                                                            Page No.
-------                                                          --------

13                Q-Med, Inc. 1999 Annual Report

21                Subsidiaries of Registrant

23                Consent of Amper, Politziner & Mattia

27                Financial Data Schedule

----------


                                       23