FORM 10-KSB

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

(Mark One)

            [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                 SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]

For the fiscal year ended:     November 30, 1995

Commission File Number:  0-11411

                                   QMED, 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                                   (Zip Code)
     executive offices)

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-KSB or any amendment to the Form 10-KSB.
[ ]

     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 23, 1996, the aggregate value of the registrant's voting
stock held by non-affiliates was $89,151,483 (computed by multiplying
the last reported sale price on February 23, 1996 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 23, 1996, there were 9,058,009 shares of the
registrant's common stock, $.01 par value, issued and outstanding.

     DOCUMENTS INCORPORATED BY REFERENCE:

         Document                                   Form 10-KSB Reference
         --------                                   ---------------------
Portions of the Registrant's Proxy Statement
 for its 1996 Annual Meeting (to be filed in
 definitive form within 120 days of the
 Registrant's Fiscal Year End)                             III

<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 markets 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. During the year ended November 30, 1995 ("fiscal 1995") the Company,
through a newly founded Interactive Heart Management Corp. subsidiary ("IHMC"),
developed and began marketing an integrated coronary artery disease management
system under the tradename "ohms/cad(TM)" to manage coronary heart disease in
conjunction with health care providers and large physician practice groups. The
Company has historically focused on producing high quality medical devices that
provide reliable diagnostic interpretation of certain disease states. These
devices 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 the early signs of
potentially acute disease. 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," 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 ("nDx") which analyzes the heart rate variability. The loss
of variation in the 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 also manufactures and
markets a non-invasive system to diagnose Deep Venous Thrombosis and other
venous abnormalities under the tradename "VasoSpect." In addition, the Company
markets, under an exclusive license, a computerized

                                       2

<PAGE>

interpretative electrocardiograph designed to interpret resting ECG signals
under the name "Interp 1000."

     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 has developed a comprehensive,
telemedicine disease management system for the coronary artery disease ("CAD")
patient. This system, referred to as ohm/cad consists of (Monitor One ambulant
ischemic technology), a remote on-line diagnostic center (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 morality and morbidity rates in populations having
CAD.

     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.

                                       3

<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 diabeteics, 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. Monitor One ischemia monitors have a programmable feature
which permits a physician to adjust the device to an individual's patient's
cardiac condition. The monitor may also be programmed to emit a tone intended to
notify the patient to certain cardiac episodes. This feature enables the patient
to intervene in, and potentially interrupt such serious ischemic episodes,
through the self administration of a physician prescribed medication or the
initiation of contact with emergency medical services. 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, in addition to reduced blood flow to the heart (myocardial
ischemia), such as certain erratic heartbeats (arrhythmias) and rate
disturbances (bradycardia and tachycardia) and is capable of continuously
monitoring patients for up to eight days. 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 coronary artery disease ("CAD"). The Company's Monitor One line
consists of seven models. The Monitor One TC Omni model is capable of providing
full disclosure of all ECG wave forms collected during a monitoring session. The
Omni series also forms the foundation of the Company's PC-ECGraph and
Insight-350 monitoring systems, introduced in November 1988 and November 1991
respectively. ECGraph and Insight couples the Monitor One Omni's full disclosure
capabilities with a personal computer to permit the further analysis of ECG
statistical and wave form data, including superimposition scanning and the
analysis of Heart Rate Variability ("HRV"), which may be an independen
predictor of the potential of "sudden cardiac death." All of the

                                       4

<PAGE>

products utilize the Company's patented Monitor One capabilities, analysis and
data storage technology, and offer a range of features for the analysis and
retrieval of ECG information in various formats. Certain patents relating to the
Company's technology begin expiring in 2004.

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

     The Company's ambulatory monitors are capable of informing a patient of the
presence of certain ECG abnormalities by tone and LCD message, if programmed by
a physician. The physician may elect to instruct the patient to take certain
appropriate medication or contact the physician when the tone indicates an
abnormality. In this way, the patient has the opportunity to intervene in and
potentially interrupt a cardiac episode. The monitor may also be programmed by a
physician so that variable thresholds of heart rate and other abnormalities can
be defined for each patient.

     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 propriety microcomputer
software to store, organize and assist in the analysis of ECG data.

                                       5

<PAGE>

OHMS/CAD(TM) SYSTEM

     ohms/cad is Interactive Heart Management Corp.'s ("IHMC") 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 STRx, IHMC's Monitor One ambulant ischemia technology; a
remote on-line diagnostic center (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: 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 (MI, 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 our
ohms/cad database (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, recommend 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.

                                       6

<PAGE>


     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.

ADDITIONAL PRODUCTS

     The Company developed and is marketing a diagnostic device that analyszes
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 manufactures and markets a non-invasive device for the
detection and differentiation of venous abnormalities under the trade name
"VasoSpect." VasoSpect non-invasively measures changes in venous circulatory
function in the lower extremities that may indicate the presence of obstructions
such as Deep Veneus Thrombosis (DVT). DVT is associated with high morbidity and
mortality, often requiring long and expensive intensive care hospitalization.
The device detects these changes during a brief non-invasive test during which
the subject wears a sensor on a leg where venous abnormalities are suspected.
The device then measures the time it takes for the blood vessels in the leg to
refill with blood. In general, the shorter the refill time, the greater the
venous abnormality.

     The Company also introduced an interpretive electrocardiograph called
"Interp 1000." Interp 1000 utilizes a proprietary technology exclusively
licensed to the Company that was developed at the University of Hanover in
Germany. This technology, referred to as "HES", has been widely described as the
most accurate commercially available interpretive ECG technology developed to
date.

                                       7

<PAGE>

MARKETING

     The Company's marketing and sales efforts 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. As of January 31, 1996, the Company maintains a staff of
approximately 40 persons to assist in sales, sales management, marketing and
technical support functions. 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.

     The marketing and sale of the Company's ohms | cad system is presently in
the early stages. Accordingly, the Company's marketing efforts to managed care
and large physician practice groups have been carried out by members of the
Company's senior management who draw upon the Company's technical resources as
needed. The Company intends to develop more marketing support staff internally
or form relationships with strategic partners in this venture. The Company is
discussing strategic alliances with several companies but there are no binding
agreements or understandings as to such a venture at the present time.

WARRANTY AND SALES TERMS

     The Company extends end-users a standard warranty and, at additional cost
to the end-user, extended one-year to three-year warranties. Extended warranty
sales represented 9.9% of net sales for fiscal 1995. 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 1995
and 1994, the Company replaced approximately 2 and 7 monitors that could not be
repaired, respectively, 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

                                       8

<PAGE>

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, 1995 and 1994,
approximately 20.9% and 11.7% of the receivable balances, respectively, were
more than 90 days past due. See "Item 6. Management's Discussion and Analysis of
Financial Condition and Results of Operations."

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, has 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 in 1995 and may continue during 1996. 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

                                       9

<PAGE>

costs. See "Item 6. Management's Discussion and Analysis of Financial Condition
and Results of Operations."

PRINCIPAL CUSTOMERS

     During fiscal 1995 and 1994, no single customer accounted for more than 10%
of the Company's net sales.

MANUFACTURING

     The Company manufactures and assembles its product line 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 Monitor One, nDx, Vasospect and Interp 1000 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 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

                                       10

<PAGE>

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 System 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 1995 and 1994, the Company expended $382,244 and $337,277
respectively, for research and development. During fiscal 1995, research and
development was primarily focused on the development of a new interactive
ischemic device designed for managed care such as health maintenance
organizations, preferred provider organizations, etc.

     Management expects to continue to develop new products, as well as enhance
its existing products and has budgeted 5% to 6% of anticipated revenue for such
research and development in fiscal 1996.

                                       11

<PAGE>


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

     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

                                       12

<PAGE>

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.

EMPLOYEES

     The Company, as of January 31, 1996, had 65 full time employees. Of these
full time employees, three were executives, five were engaged in sales
supervisory capacities, 27 in sales and marketing, six in engineering, eight in
production and 16 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 4,000 square feet of space in
Ronkonkoma, New York used principally for research and development and quality
control and 4,884 square feet in Sag Harbor, New York for assembly. 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.

                                       13

<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 15 of the Registrant's 1995 Annual Report to Stockholders is
incorporated herein by reference.

ITEM 6. 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 3 to 5 of the Registrant's 1995 Annual Report
to Stockholders is incorporated herein by reference.

ITEM 7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

     Financial statements and supplementary data as set forth on pages 6 to 14
of the Registrant's 1995 Annual Report to Stockholders is incorporated herein by
reference.

ITEM 8. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

     None.

                                       14

<PAGE>


                                    PART III

ITEM 9. 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, 1995 and is incorporated herein by
reference.

ITEM 10. 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, 1995 and is incorporated herein by reference.

ITEM 11. 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, 1995 and is
incorporated herein by reference.

ITEM 12. 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, 1995 and is incorporated herein by
reference.

                                       15
<PAGE>


                                     PART IV

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K.

     (a) 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:

<TABLE>
<CAPTION>

Official
Exhibit                                                                               Sequential
  No.     Description                                                                  Page No.
-------   -----------                                                                 ----------
 <S>      <C>                                                                          <C>
    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

  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 Agreement dated June 20, 1995 (Exhibit 10.1 to From S-8,             I/B/R
          file No. 33-80091)

  4.3     Form of Warrant Agreement dated November 15, 1995 (Exhibit 10.21 to
          Form S-8, file No. 33-80091)

    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
</TABLE>


                                       16

<PAGE>

<TABLE>

    <S>   <C>                                                                          <C>
    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

    10.7  Lease dated June 1, 1992 between the Company as Lessee and Graphic
          Arts Building Co. (Exhibit 10.11 to the Company's Form 10-KSB Report
          dated November 30, 1992)                                                     I/B/R

    10.8  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

    10.9  Lease dated October 13, 1993 between the Company and the Equitable
          Life Assurance Society (Exhibit 10.9 to the Company's Form 10-KSB
          dated November 30, 1993                                                      I/B/R

    11    None

    13    Q-Med, Inc. 1995 Annual Report.

    16    None.

    18    None.

    21    Subsidiaries of Registrant
</TABLE>


                                       17

<PAGE>

<TABLE>
    <S>   <C>  

    22    None.

    23    Consent of Amper, Politziner & Mattia

    24    None.

     (b)  Reports on Form 8-K

          Form 8-K Report dated November 17, 1995 relating to a Private
          Placement of the Company's Common Stock

</TABLE>

                                       18


<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, 1996                        Q-MED, INC.

                                                By:  /s/ Michael W. Cox
                                                ------------------------------
                                                         Michael W. Cox,
                                                         Chairman of the Board

         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              Chairman of the Board,         February 28, 1996
---------------------------     President and Treasurer
Michael W. Cox                  (Principal Executive and
                                Financial Officer)


/s/ RICHARD I. LEVIN            Secretary, Director            February 28, 1996
---------------------------
Richard I. Levin

/s/ROBERT A. BURNS              Director                       February 28, 1996
---------------------------
Robert A. Burns

/s/ DEBRA A. FENTON             Controller                     February 28, 1996
---------------------------
Debra A. Fenton


                                       19