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                     U.S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C.  20549

                                   FORM 10-QSB

[ X ]     QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
          SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1997

[   ]     TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
          SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to _________

COMMISSION FILE NUMBER 0-22247

                             NUTRITION MEDICAL, INC.
        (Exact name of Small Business Issuer as specified in its charter)


          MINNESOTA                                  41-1756256
(State or other jurisdiction                      (I.R.S. Employer
of incorporation or organization)                 Identification Number)

            9850 51ST AVENUE NORTH, SUITE 110, MINNEAPOLIS, MN  55442
                    (Address of principal executive offices)

                                 (612) 551-9595
                           (Issuer's telephone number)

     Check whether the issuer (1) filed all reports required to be filed by 
Section 13 or 15(d) of the Exchange Act during the past 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 _____

     State the number of shares outstanding of each of the issuer's classes 
of common equity, as of the last practicable date:

          Class                         Outstanding as of May 12, 1997 Common 
          -----                         -------------------------------------
Stock, $.01 par value                                5,453,024 shares

Transitional Small Business Disclosure Format (Check one):  Yes      No   X  
                                                                ----    ----

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                             NUTRITION MEDICAL, INC.

                                      INDEX


                          PART I - FINANCIAL INFORMATION


Item 1.   Financial Statements                                         Page No.
                                                                       --------
          Condensed Statements of Operations (Unaudited) For the 
               Three Months Ended March 31, 1997 and 1996                  2   

          Condensed Balance Sheets (Unaudited) As of 
               March 31, 1997 and December 31, 1996                        3   

          Condensed Statements of Cash Flows (Unaudited)
               For the Three Months Ended March 31, 1997 and 1996          4   

          Notes to Condensed Financial Statements (Unaudited)              5   

Item 2.   Management's Discussion and Analysis of Financial
          Condition and Results of Operations                              7   

                            PART II - OTHER INFORMATION


Item 6.   Exhibits and Reports on Form 8-K                                11 

                                       1

<PAGE>


                         PART I - FINANCIAL INFORMATION
ITEM 1.   FINANCIAL STATEMENTS

                             NUTRITION MEDICAL, INC.
                       CONDENSED STATEMENTS OF OPERATIONS
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                         Three months ended
                                                              March 31,
                                                              ---------
                                                      1997               1996
                                                      ----               ----
<S>                                             <C>                  <C>
Net sales                                       $  1,214,000         $  704,923
Cost of goods sold                                   899,605            432,979
                                                ------------         ----------

Gross profit                                         314,395            271,944

Operating expenses:
  Selling, general and administrative                644,486            312,165
  Research and development                           117,191             51,719
                                                ------------         ----------
                                                     761,677            363,884
                                                ------------         ----------

Operating loss                                      (447,282)           (91,940)

Other income (expense):
  Interest income                                     48,669             10,655
  Interest expense                                   (41,408)            (1,425)
                                                ------------         ----------
                                                       7,261              9,230
                                                ------------         ----------

Net loss                                        $   (440,021)        $  (82,710)
                                                ------------         ----------
                                                ------------         ----------

Net loss per share                              $       (.08)        $     (.03)
                                                ------------         ----------
                                                ------------         ----------

Weighted average number of shares
  outstanding                                      5,324,524          3,105,524
                                                ------------         ----------
                                                ------------         ----------
</TABLE>

            See accompanying notes to condensed financial statements

                                       2

<PAGE>

                             NUTRITION MEDICAL, INC.
                            CONDENSED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                         March 31,       December 31,
                                                                           1997              1996
                                                                           ----              ----
                                                                        (Unaudited)         (Note)
<S>                                                                   <C>               <C>
                                      ASSETS
Current assets:
   Cash and cash equivalents                                          $  3,549,524      $  2,553,955
   Short-term investments                                                       --         1,671,596
   Accounts receivable (net)                                               615,090           356,240
   Inventories                                                           1,089,505           460,115
   Prepaid expenses                                                        156,455            34,039
                                                                      ------------      ------------

       Total current assets                                              5,410,574         5,075,945
Equipment and office furniture (net)                                       959,680           132,369
Goodwill (net)                                                           3,434,098                --
                                                                      ------------      ------------

           Total assets                                               $  9,804,352      $  5,208,314
                                                                      ------------      ------------
                                                                      ------------      ------------

                          LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
   Accounts payable                                                   $    432,815      $    269,037
   Accrued expenses                                                        290,164           240,041
                                                                      ------------      ------------

       Total current liabilities                                           722,979           509,078

Subordinated note payable (net)                                          1,615,908                --

Shareholders' equity:
   Common stock, $.01 par value, 20,000,000 shares
       authorized, 5,448,024 and 4,593,024 issued and
       outstanding in 1997 and 1996                                         54,480            45,930
   Additional paid-in capital                                           10,140,987         6,943,287
   Accumulated deficit                                                  (2,730,002)       (2,289,981)
                                                                      ------------      ------------

       Total shareholders' equity                                        7,465,465         4,699,236
                                                                      ------------      ------------
           Total liabilities and shareholders' equity                 $  9,804,352      $  5,208,314
                                                                      ------------      ------------
                                                                      ------------      ------------
</TABLE>

Note:  The balance sheet at December 31, 1996 has been derived from the audited
  financial statements at that date but does not include all of the information
  and footnotes required by generally accepted accounting principles for
  complete financial statements.

See accompanying notes to condensed financial statements  

                                       3

<PAGE>

                             NUTRITION MEDICAL, INC.
                       CONDENSED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                              Three months ended
                                                                                   March 31,
                                                                                   ---------
                                                                            1997              1996
                                                                            ----              ----
<S>                                                                    <C>                <C>
OPERATING ACTIVITIES                                                              
   Net loss                                                            $  (440,021)       $  (82,710)
   Adjustments to reconcile net loss to net cash
           used in operating activities:
       Amortization                                                         96,235                --
       Depreciation                                                         31,548             5,500
       Changes in operating assets and liabilities:
              Accounts receivable                                         (258,850)          (28,127)
              Inventories                                                 (129,390)           50,448
              Prepaid expenses                                            (122,416)          (23,075)
              Accounts payable                                             163,778          (153,055)
              Accrued expenses                                              50,123           (28,096)
                                                                      ------------        ----------
Net cash used in operating activities                                     (608,993)         (259,115)

INVESTING ACTIVITIES
   Proceeds from sale of short-term investments                          1,671,596                --
   Purchase of goodwill                                                    (58,174)               --
   Purchase of equipment and office furniture                               (8,860)           (9,150)
                                                                      ------------        ----------
Net cash provided by (used in) investing activities                      1,604,562            (9,150)

FINANCING ACTIVITIES
Net cash provided by financing activities                                       --                --
                                                                      ------------        ----------

Increase (decrease) in cash                                                995,569          (268,265)
Cash and cash equivalents at beginning of period                         2,553,955         1,127,247
                                                                      ------------        ----------

Cash and cash equivalents at end of period                            $  3,549,524        $  858,982
                                                                      ------------        ----------
                                                                      ------------        ----------
</TABLE>

<TABLE>
<S>                                                                     <C>
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTMENT AND 
       FINANCING ACTIVITIES
   Acquisition of Elan Pharma, Inc. product line through:
       Issuance of note payable                                         $1,593,750
       Issuance of common stock                                          3,206,250
</TABLE>


See accompanying notes to condensed financial statements  

                                       4

<PAGE>

                             NUTRITION MEDICAL, INC.
                     NOTES TO CONDENSED FINANCIAL STATEMENTS
                                   (UNAUDITED)


1.   BASIS OF PRESENTATION

     The condensed financial statements as of March 31, 1997 and for the 
three months ended March 31, 1997 and 1996 included in this Form 10-QSB have 
been prepared by the Company pursuant to the rules and regulations of the 
Securities and Exchange Commission.  Certain information and footnote 
disclosures, normally included in financial statements prepared in accordance 
with generally accepted accounting principles, have been condensed or omitted 
pursuant to such rules and regulations.  These financial statements should be 
read in conjunction with the financial statements and related notes thereto 
included in the Company's December 31, 1996 Annual Report on Form 10-KSB.

     The condensed financial statements presented herein as of March 31, 1997 
and for the three months ended March 31, 1997 and 1996 are unaudited, but in 
the opinion of management, reflect all adjustments, consisting of normal 
recurring adjustments, necessary for a fair presentation of financial 
position, results of operations and cash flows for the periods presented.  
The results of operations for any interim period are not necessarily 
indicative of results for the full year.

2.   PRODUCT LINE ACQUISITION

     On January 13, 1997, the Company executed an Asset Purchase Agreement 
(the "Agreement") whereby the Company acquired certain assets from Elan 
Pharma, Inc. ("Elan"), a U.S. subsidiary of Ireland-based Elan Corporation, 
plc.  The assets purchased pursuant to the Agreement include the inventory 
and fixed assets relating to the production of the enteral (tube feeding) 
products (the "Acquired Products") of Elan as well as exclusive rights to 
manufacture and market the Acquired Products. In exchange for the Acquired 
Products and related assets, the Company issued Elan a subordinated 
promissory note in the amount of $3,000,000 (due in seven years along with 
interest accruing at three percent per annum) and 855,000 shares of the 
Company's common stock.  The Agreement allows for the forgiveness of up to 
100% of the promissory note based upon the Company's future stock performance 
and contains provisions which restrict Elan's ability to vote or sell the 
shares of Common Stock.  Total value of the transaction, after taking into 
consideration market interest rates on the note payable, and $58,174 in 
acquisition expenses associated with the purchase, was $4,858,174.

                                       5

<PAGE>

                             NUTRITION MEDICAL, INC.
               NOTES TO CONDENSED FINANCIAL STATEMENTS (CONTINUED)
                                   (UNAUDITED)


2.   PRODUCT LINE ACQUISITION (CONTINUED)

      Based upon management's estimates of asset values, taking into 
consideration market values and condition of the assets as well as the future 
cash flows estimated to be generated from the Acquired Products, the 
following represents an allocation of the purchase price to the acquired 
assets, with the excess of the purchase price over the assets allocated to 
goodwill:

          Inventory                     $  500,000
          Manufacturing equipment          500,000
          Leased pumps                     350,000
          Goodwill                       3,508,174
                                        ----------
                                        $4,858,174
                                        ----------
                                        ----------


3.   NET LOSS PER SHARE

     Net loss per share is computed using the weighted average number of 
common shares outstanding during the period.  Common equivalent shares from 
stock options and warrants are excluded from the computation as their effect 
is antidilutive.  In February 1997, the Financial Accounting Standards Board 
(FASB) issued FASB Statement No. 128, "EARNINGS PER SHARE".  This Statement 
replaces the presentation of primary earnings per share (EPS) with basic EPS 
and also requires dual presentation of basic and dilutive EPS for entities 
with complex capital structures.  This Statement is effective for the fiscal 
year ending December 31, 1997.  For the quarter ended March 31, 1997,  there 
is no difference between basic earnings per share under Statement No. 128 and 
primary net loss per share as reported.

                                      6

<PAGE>

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
               CONDITION AND RESULTS OF OPERATIONS


CAUTIONARY STATEMENT

     This Quarterly Report on form 10-QSB contains forward-looking statements 
within the meaning of Section 27A of the Securities Act of 1933, as amended, 
and Section 21E of the Securities Exchange Act of 1934, as amended.  When 
used in this Form 10-QSB and in future filings by the Company with the 
Securities and Exchange Commission, in the Company's press releases and in 
oral statements made with the approval of an authorized executive officer, 
the words or phrases "believes", "anticipates", "intends", "will likely 
result", "estimates", "projects" or similar expressions are intended to 
identify such forward -looking statements, but are not the exclusive means of 
identifying such statements. These forward-looking statements involve risks 
and uncertainties that may cause the Company's actual results to differ 
materially from the results discussed in the forward-looking statements.  The 
Company wishes to caution readers not to place undue reliance on any such 
forward-looking statements, which speak only as of the date made.  The 
Company undertakes no obligation to revise any forward-looking statements in 
order to reflect events or circumstances after the date of such statements.  
Readers are urged to carefully review and consider the various disclosures 
made by the Company in this report and in the Company's other reports filed 
with the Securities and Exchange Commission that attempt to advise interested 
parties of the risks and factors that may affect the Company's business.  
Such forward-looking statements are qualified in their entirety by the 
cautions and risk factors set forth under the "Cautionary Statement" filed as 
exhibit 99.1 to this Form 10-QSB.

GENERAL

     The Company develops and sells nutrition products marketed as 
cost-effective, generic alternatives to equivalent national branded products. 
Products to date have focused on clinical products for the healthcare 
industry and adult nutrition supplements generally sold to large retailers 
under private label arrangements.  In addition, the Company is currently 
developing an infant formula.

CLINICAL PRODUCTS
     The Company's initial product development efforts centered on branded 
generic products for the critical care nutrition market. These products are 
sold to hospitals and other health care providers to feed critically ill 
patients who cannot consume adequate nutrients orally and consequently 
require specialized feeding via tubes into the intestinal tract.  As of March 
31, 1997, the Company had developed six such products. Critical care 
nutrition products are generally purchased by a relatively large customer 
base which typically places orders in relatively small order quantities.

     On January 13, 1997, the Company expanded its clinical products line by 
acquiring the inventory and fixed assets associated with the production of 
the enteral (tube feeding) products of Elan Pharma, Inc. as well as the 
exclusive rights to manufacture and market approximately 40

                                       7

<PAGE>

enteral products consisting of special formulas, disposable administration 
hardware and the related delivery pumps. 

RETAIL PRODUCTS-PRIVATE LABEL NUTRITION PRODUCTS
     In October 1995, the Company introduced an adult nutrition supplement 
product line.  Adult nutrition supplements are designed to provide balanced 
nutrition in beverage form as a supplement or substitute for solid food for 
healthy individuals as well as those recovering from or affected by illness. 
These products are marketed to retail chains and are generally packaged using 
the retailer's proprietary store brand label. Such private label products 
allow the retailer to offer quality, low cost alternatives to national 
branded adult nutrition products.  The Company's private label nutrition 
product line currently consists of three adult nutrition supplements, each of 
which is available in three flavors.  Adult nutrition supplements are 
generally purchased by a relatively small customer base which typically 
places relatively large orders.

RESULTS OF OPERATIONS

THREE MONTHS ENDED MARCH 31, 1997 AND 1996

     NET SALES.  The Company's net sales for the three months ended March 31, 
1997 totaled $1,214,000, representing an increase of $509,076, or 72%, over 
net sales of $704,925 in the corresponding 1996 period.  Sales of the 
Company's clinical products, which in the 1996 period totaled $276,934, 
increased 175% to $760,784 in the three months ended March 31, 1997. 84 % of 
the increase in clinical product sales is attributable to sales of the 
products acquired from Elan Pharma, Inc. in January 1997. Sales of the 
Company's retail products totaled $453,217 (14 customers) in the three months 
ended March 31, 1997, an increase of $25,227 over the corresponding 1996 
period, in which 77% of total retail sales consisted an initial stocking 
order to one customer.

     The prices of the Company's products remained relatively stable within 
and between the two reporting periods. In response to the Company's strategy 
of marketing its critical care nutrition products as less expensive 
alternatives to established brands, a competitor of the Company has lowered 
its prices to select customers of its branded products, offsetting part or 
all of the price advantage of the Company's three competing products.  
Although the Company continues to experience overall sales growth of these 
products, management believes that these selective price reductions resulted 
in lost sales and slowed the rate of sales growth of the Company's three 
competing products, and that this competitor will continue to use this form 
of selective price competition. Management further believes that the impact 
on total sales of this competitor's price reductions may be lessened as the 
Company introduces additional non-competing products.

     GROSS PROFIT.  The Company's gross profit increased 15% to $314,395 for 
the three months ended March 31, 1997, compared with $271,944 in the same 
period in 1996.  The following table sets forth the gross profit and gross 
profit percentage, by product line, for the three months ended March 31, 1997 
and 1996:

                                       8

<PAGE>

<TABLE>
<CAPTION>
                                            Three months ended March 31,
                                            ----------------------------
                                      1997                               1996
                          --------------------------         --------------------------
   Product Line           Gross profit    % of Sales         Gross Profit    % of Sales
   ------------           --------------------------         --------------------------
<S>                        <C>                <C>              <C>                <C>
Clinical Products          $264,821           34.8%            $163,887           59.2%
Retail Products              49,575           10.9              108,057           25.2%
                          --------------------------         --------------------------
     Total                 $314,395           25.9%            $271,944           38.6%
</TABLE>

The decrease in overall gross profit, as a percentage of sales, is related to 
product mix differences between the two periods and increased indirect 
production and distribution overhead costs.  The gross profit generated by 
the Company's clinical products decreased as a percentage of clinical sales, 
principally as a result of the introduction in the 1997 period of the 
products acquired from Elan, which generally contribute relatively lower 
margins when compared to the critical care products sold in previous periods. 
 Management expects that while increased sales of these acquired products 
will continue to generate an increase in the clinical product gross profit 
contribution, the overall gross profit, as a percentage of sales, will 
decline, particularly if sales of the lower gross profit acquired products 
increase as a proportion of total clinical product sales.  The decrease in 
gross profit as a percentage of retail product sales is attributable to a 
$40,000 write-off of dated product and a gross profit percentage in the 1996 
period that exceeded historical levels. The 1997 retail product gross profit, 
excluding the aforementioned write-off, was within the historical product 
line gross profit range.

     SELLING, GENERAL AND ADMINISTRATIVE.  Selling, general and 
administrative expenses in the three months ended March 31, 1997, increased 
by $332,321, or 106%, compared with the same period in 1996.  The increase is 
related to higher costs resulting from the continued development of the 
Company's sales and administration infrastructure and approximately $100,000 
in depreciation and goodwill amortization charges related to the Elan Pharma, 
Inc. product acquisition.

     RESEARCH AND DEVELOPMENT.  Research and development costs increased 128% 
to $117,191 for the three months ended March 31, 1997, compared with $51,719 
in the corresponding 1996 period.  The increase is attributable to higher 
costs associated with the Company's development of several infant formula 
products.

LIQUIDITY AND CAPITAL RESOURCES

     Since inception, the Company has incurred net losses and negative cash 
flows from operations. On September 26, 1996, the Company's initial public 
offering was declared effective by the Securities and Exchange Commission. 
The Company sold pursuant to this registration statement, in a transaction 
that closed on October 1, 1996, 1,437,500 shares of the Company's Common 
Stock at $3.50 per share, including an overallotment of 197,500 shares.  Net 
proceeds to the Company, after deducting all offering costs, totaled $4.24 
million. Unused funds are invested in U.S. Treasury bills with maturities 
ranging from one to six months.  

                                      9

<PAGE>

     Prior to the initial public offering, the Company's principal source of 
cash and working capital had been from the private placement of Common Stock, 
through which the Company has received approximately $2,800,000 in net 
proceeds. The Company also obtained loans from the City of Buffalo, Minnesota 
totaling $100,000. These loans were repaid in July 1996 when the Company 
relocated to Minneapolis, Minnesota.  

     On January 13, 1997, the Company executed an Asset Purchase Agreement 
whereby the Company acquired certain assets from Elan Pharma, Inc. ("Elan"), 
a U.S. subsidiary of the Ireland-based Elan Corporation, plc. The agreement 
provides for the sale to the Company of the inventory and fixed assets 
relating to the production of the enteral (tube feeding) products of Elan as 
well as exclusive rights to manufacture the products. In exchange for the 
product rights and related assets, the Company issued the seller 855,000 
shares of common stock and a subordinated promissory note in the amount of 
$3,000,000.  The note, along with all interest, which accrues at 3% per 
annum, is due in seven years.

     In connection with the above described activities and results of 
operations, the Company's net cash used by operations in the three months 
ended March 31, 1997 totaled $608,993.  Cash and cash equivalents as of March 
31, 1997 totaled $3,549,524.

     The Company expects that the existing cash balances will be sufficient 
to fund operations of the Company through 1997. However, the Company's future 
liquidity and capital requirements will depend on numerous factors including 
competition, the extent to which the Company's products gain market 
acceptance and the costs and timing of expansion of sales, marketing and 
product development activities. There can be no assurance that the Company 
will not be required to raise additional capital before the end of 1997 or 
any time thereafter, or that such capital will be available on acceptable 
terms, or at all. The Company's strategy for 1997 includes pursuing the 
establishment of a bank line of credit to secure additional operating funds, 
should they be needed. There can be no assurance that such a credit line, if 
needed, can be secured on terms acceptable to the Company.

                                      10

<PAGE>


                         PART II - OTHER INFORMATION


ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K


     a)   The following exhibits are included with this quarterly report on Form
          10-QSB as required by Item 601 of Regulation S-B.

          Exhibit                                      
          Number               Description                 
          -------              -----------
          11          Calculation of loss per share
          27          Financial data schedule
          99.1        Cautionary Statement

     b)   Reports on Form 8-K.
          
          On January 23, 1997, the Company filed a Current Report on Form 8-K
          pursuant to the requirements of Form 8-K, Item 2 with regard to the
          Asset Purchase Agreement executed on January 13, 1997 with Elan
          Pharma, Inc.
          
          On March 31, 1997, the Company filed a Current Report on Form 8K/A
          regarding additional information with regard to the aforementioned
          acquisition.  This Current Report included financial statements of
          the business acquired and proforma financial information.


                                      11

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                                    SIGNATURE

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

                                        NUTRITION MEDICAL, INC.

     Dated:   May 12, 1997              By: /s/   Richard J. Hegstrand
                                           ---------------------------
                                            Chief Financial Officer
                                   
                                      12

<PAGE>

                                  EXHIBIT INDEX



          Exhibit                                      
          Number                     Description                
          ------                     -----------
          
          11             Calculation of loss per share
          27             Financial data schedule
          99.1           Cautionary Statement


                                      13