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, 1996

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:  (908) 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-B 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 19, 1997, the aggregate value of the registrant's voting
stock held by non-affiliates was $79,761,981 (computed by multiplying the last
reported sale price on February 19, 1997 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
persons are affiliates of the registrant).

      As of February 19, 1997, there were 9,504,505 shares of the registrant's
common stock, $.01 par value, issued and outstanding.

         Documents incorporated by reference:

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

Portions of the Registrant's Proxy Statement for            III
its 1997 Annual Meeting (to be filed in definitive
form within 120 days of the Registrant's Fiscal
Year End) 

<PAGE>

                                     PART I

ITEM 1. BUSINESS

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 managed
care organizations manage the cost of coronary artery disease ("CAD"). The
Company has historically focused on producing high quality medical devices that
provide reliable diagnostic interpretation of certain disease states, including
a line of ambulatory ischemic heart monitors, an interpretative
electrocardiograph, a device for the analysis of heart rate variability and a
device 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 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.

      The Company has developed and markets a full line of ambulatory
computerized ischemic heart disease monitors utilizing patented technology.
These ambulatory products, marketed under the name "Monitor One(R),"
continuously analyze and interpret the discrete marker of ischemic heart
disease, the ST-segment of electrocardiographic ("ECG") signals generated by the
heart utilizing patented and proprietary technology in real time. 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.

      Utilizing the experience obtained through various drug trials with such
companies as Pfizer, Ciba Geigy, ICI and others and the extensive validations
completed on Monitor One instruments, the Company developed a comprehensive,
telemedicine disease management system 


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<PAGE>

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, the modification of
risk-factors and medical intervention. Early treatment, emphasis on medical
intervention, appropriate referrals to the cardiologist results in an overall
lowering of the cost of CAD care and the improvement in mortality and morbidity
rates in populations having CAD.

      In April 1996, the Company entered into a Strategic Alliance Agreement
with SmithKline Beecham Health Care Services, a division of SmithKline Beecham
Corporation ("SmithKline Beecham"). Under the agreement, SmithKline Beecham has
the exclusive right to market and sell the Company's ohm | cad system to managed
care companies in the United States, together with the Company's IHMC
subsidiary. In addition, SmithKline Beecham's venture capital affiliate, S.R.
One Limited, made a $2 million equity investment in the Company and acquired
warrants to acquire an additional 63,492 shares of the Company's common stock
for $15.75 per share. In certain circumstances, the Company can require S.R. One
Limited to exercise the warrants. The Company and SmithKline Beecham share
profits and losses after the Company recovers its costs of operating the
ohms|cad system for clients.

      The Company's executive offices are located at 100 Metro Park South,
Laurence Harbor, New Jersey 08878 and its telephone number is (908) 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.

      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:


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<PAGE>

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 secondary prevention
analysis and treatment. Recommendations for management are relational and
tailored to an individual patient for lipid and hypertension management,
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 (PCP) 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. In the end, it is "coronary wellness" that
counts. It is durable, measurable and less costly than conventional care. As a
result, the early implementation of ohms|cad should contribute to significant
savings and patient gains in market share.

      The ohms|cad system is presently implemented in one large physician
practice group where approximately 1400 CAD patients have been managed for a
period of 20 months. The Company expects to implement the system in several
managed care organizations within the next year.


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<PAGE>

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 


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<PAGE>

during battery pack replacement or if the monitor is turned off for a minimum of
one year. In addition, the monitors indicate, by audible tone and liquid crystal
display ("LCD"), when battery replacement is required.

      An integral part of Monitor One TC and Omni systems developed by the
Company is called the buffered interface module ("BIM"). The BIM permits the
rapid retrieval and storage of data from Monitor One units prior to printing
reports. This permits a physician to remove data stored after a monitoring
session and re-employ the monitor while the report is printing. The BIM also
permits data to be transferred to a microcomputer system base station, either
directly or telephonically. The Company has developed proprietary microcomputer
software to store, organize and assist in the analysis of ECG data.

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).

      The Company also manufactures and markets other non-invasive medical
devices.

Marketing

      Pursuant to the Company's Strategic Alliance Agreement with SmithKline
Beecham, SmithKline Beecham provides sales and marketing support to the
Company's ohms|cad sales organization. At present, the Company's sales team
consists primarily of senior management supported by six senior sales staff
persons that formerly were involved in the sales of the Company's Monitor One
products. The Company is still developing and supplementing an integrated
marketing plan with SmithKline Beecham which will include the utilization of
SmithKline Beecham's Integrated Health Care Division sales force to provide and
market ohms|cad services.


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<PAGE>

      The marketing and sales of the Company's devices to primary care
physicians, hospitals and other health care providers are conducted through the
Company's own direct sales force. Foreign medical product distributors sell the
Company's products in Europe. The Company also participates with unaffiliated
leasing companies in sales promotions involving financing for the end-user.

      The Company also markets its products outside of the United States to
physicians and health care institutions through foreign distributors. In an
effort to expand its network of foreign distributors, the Company continually
evaluates established medical product distributors and supports validation
studies of its products by foreign research institutions. There is no assurance
that such efforts will result in the acceptance of the Company's products by the
medical community of countries in which validation studies are performed or
increase the Company's export sales. The Company's international operations are
subject to the usual risks of doing business abroad, including currency
fluctuations, government regulations, and the economic and political stability
of the countries in which it operates. In addition to the use of the Company's
products by physicians, its products have been used in clinical drug testing and
other clinical studies.

Warranty and Sales Terms

      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 13.4% of net sales
for fiscal 1996. 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 1996 and 1995, the Company replaced
approximately 4 and 6 monitors, respectively, that could not be repaired
pursuant to its warranty programs.

      The Company maintains a general policy of net 30 days payment terms for
distributors, cash or third party leasing arrangements for direct end user sales
and generally requires letters of credit or other secured terms for
international sales. In some cases, the Company has extended credit beyond 30
days. As a matter of general policy, however, the Company does not enter into
consignment arrangements with end-users or distributors and sales are made
without the right of return. From time to time, the Company has offered certain
distributors the opportunity, upon the introduction of new or upgraded products,
to exchange their inventory units as part of its marketing efforts. In such
cases, the customer was billed for the net price differential (generally not
significant) at the time of the product exchange. As of November 30, 1996 and
1995, approximately 19.1% and 20.9% of the receivable balances, respectively,
were more than 90 days past due. See "Item 7. Management's Discussion and
Analysis of Financial Condition and Results of Operations."


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<PAGE>

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, sales by the Company. In addition,
uncertainties created by proposals to reform the 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. However, 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 1996, 1995 and 1994, no single customer accounted for more
than 10% of the Company's net sales.


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<PAGE>

Manufacturing

      The Company assembles its product line and the components of its ohms|cad
system at its Sag Harbor, New York facility where the final testing and
packaging of the Company's products is performed. It 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. 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 sub-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

      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.

      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.


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<PAGE>

      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 its
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's VasoSpect system, which is designed to detect abnormalities
of venous blood flow, competes with other older and more well known technologies
such as doppler and ultrasound. Nevertheless, management believes that
VasoSpect's unique interpretative diagnostic capabilities for the analysis of
venous blood flow will allow it to compete favorably with existing technologies.

      The Company believes that direct competition in ambulatory ischemic
monitors; products for testing autonomic function; interpretive ECG; and venous
blood flow analysis 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 1996, 1995 and 1994, the Company expended $348,840, $382,244 and
$337,277 respectively, for research and development. During fiscal 1996 and
1995, research and development was primarily focused on the development of the
ohms|cad system for managed care such as health maintenance organizations,
preferred provider organizations, and large physician groups.

      Management expects to continue to develop new products, as well as enhance
its existing products and has budgeted 8% to 10% of anticipated revenue for such
research and development in fiscal 1997.

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). The 


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<PAGE>

Company applied for a patent for the ohms|cad system (Serial No. 08/414,510) on
March 31, 1995 which is pending. 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.


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<PAGE>

Employees

      The Company, as of January 31, 1997, had 47 full time employees. Of these
full time employees, 3 were executives, 8 were engaged in sales supervisory
capacities, 12 in sales and marketing, 4 in engineering, 7 in production, 5 in
technical support and 8 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.

      None.


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<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 24 of the Registrant's 1996 Annual Report to Stockholders
is incorporated herein by reference.

Item 6. Selected Financial Data.

      Selected financial data as set forth on page 5 of the Registrant's 1996
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 6 to 10 of the Registrant's 1996 Annual
Report to Stockholders is incorporated herein by reference.

Item 8. Financial Statements and Supplementary Data.

      Financial statements and supplementary data as set forth on pages 11 to
22 of the Registrant's 1996 Annual Report to Stockholders is incorporated
herein by reference.

Item 9. Disagreements on Accounting and Financial Disclosure.

      None.


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<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, 1996 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, 1996 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, 1996 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, 1996 and is incorporated herein by
reference.


                                       14
<PAGE>

                                     PART IV

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

      (a) (1) Financial Statements.

            Description                                                     Page
            -----------                                                     ----

            Independent Auditors Report

            Consolidated Balance Sheets as of November 30, 1996 and
            1995

            Consolidated Statement of Operations for each of the three
            years ended November 30, 1996, 1995 and 1994

            Consolidated Statement of Stockholder's Equity for each of
            the three years ended November 30, 1996, 1995 and 1994

            Consolidated Statement of Cash Flow for each of the three
            years ended November 30, 1996, 1995 and 1994

            Notes to Consolidated Financial Statements

          (2) Financial Statement Schedules

            Schedules have been omitted because they are not applicable.

          (3) Exhibits.

      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:

Official
Exhibit                                                               Sequential
  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


                               15
<PAGE>

    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

    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        Warrant to Purchase Common Stock dated May 6, 1996
               i/n/o S.R. One Limited

    9          None

   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        Loan and Security Agreement dated November 1, 1989
               between First Fidelity Bank, National Association
               and the Company (Exhibit 10.1 to the Company's
               report on Form 8-K dated November 27, 1989, as
               amended by Form 8 dated December 6, 1989)                  I/B/R

   10.3        Modification Agreement dated April 16, 1991
               between the Company and First Fidelity Bank, N.A.
               New Jersey (Exhibit 10.1 to the Company's Form
               10-Q Report dated February 28, 1991)                       I/B/R

   10.4        Limited Corporate Guaranty of Heart Map, Inc.
               dated April 16, 1991 (Exhibit 10.3 to the
               Company's Form 10-Q Report dated February 28,
               1991)                                                      I/B/R

   10.5        Security Agreement between Heart Map, Inc. First
               Fidelity Bank, N.A. New Jersey dated April 16,
               1991 (Exhibit 10.2 to the Company's Form 10-Q
               Report dated February 28, 1991)                            I/B/R

   10.6        Term Promissory Note payable to First Fidelity
               Bank dated March 13, 1992 (Exhibit 25.1 to the
               Company's Form 8-K Report dated March 13, 1992)
                                                                          I/B/R


                               16
<PAGE>

   10.7        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

   10.8        Strategic Alliance Agreement effective as of April
               1, 1996 between Q-Med, Inc. and SmithKline Beecham
               Health Services, a division of SmithKline Beecham
               Corporation

   10.9        Securities Purchase Agreement dated May 6, 1996
               between Q-Med, Inc. and S.R. One Limited

   10.10       Registration Rights Agreement dated May 6, 1996
               between Q-Med, Inc. and S.R. One Limited

   11          None

   13          Q-Med, Inc. 1996 Annual Report.

   16          None.

   18          None.

   21          Subsidiaries of Registrant

   22          None.

   23          Consent of Amper, Politziner & Mattia

   24          None.

            (b) Reports on Form 8-K

                  None.

   27          Financial Data Schedule

                               17
<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 28, 1997               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 28, 1997
---------------------------     (Principal Executive and
Michael W. Cox                  Financial Officer)
                                    


/s/ Richard I. Levin            Director                      February 28, 1997
---------------------------
Richard I. Levin


/s/Robert A. Burns              Director                      February 28, 1997
---------------------------
Robert A. Burns


                                Director                      February   , 1997
---------------------------
Howard L. Waltman


/s/ Herbert H. Sommer           Director                      February 28, 1997
---------------------------
Herbert H. Sommer


/s/ Debra A. Fenton             Controller                    February 28, 1997
---------------------------
Debra A. Fenton


                                       18
<PAGE>

                            EXHIBIT INDEX

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

4.2         Warrant to Purchase Common Stock dated May 6, 1996
            i/n/o S.R. One Limited                                        20

10.8        Strategic Alliance Agreement effective as of April 1,
            1996 between Q-Med, Inc. and SmithKline Beecham
            Health Services, a division of SmithKline Beecham
            Corporation                                                   29

10.9        Securities Purchase Agreement dated May 6, 1996
            between Q-Med, Inc. and S.R. One Limited                      60

10.10       Registratioin Rights Agreement dated May 6, 1996
            between Q-Med, Inc. and S.R. One Limited                      69

13          Q-Med, Inc. 1996 Annual Report.                               77

21          Subsidiaries of Registrant                                   103

23          Consent of Amper, Politziner & Mattia                        104

27          Financial Data Schedule