<PAGE>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

FORM 10-K Annual report pursuant to Section 13 of the Securities Exchange Act of
                                      1934
                  For the fiscal year ended: December 31, 1997
                        Commission file number: 000-23266

                               UroMed Corporation
             (Exact name of registrant as specified in its charter)

          Massachusetts                           04-3104185
      (State or other jurisdiction of              (I.R.S. Employer
    incorporation or organization)               Identification No.)

                    64 A Street, Needham, Massachusetts 02194
                    (Address of principal executive offices)

                                 (781) 433-0033
              (Registrant's telephone number, including area code)
        Securities registered pursuant to Section 12(b) of the Act: None

           Securities registered pursuant to Section 12(g) of the Act:
                           Common Stock, no par value
             [including the related Preferred Stock Purchase Rights]
                                (Title of Class)

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    -

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

As of January 30, 1998, the aggregate market value of the registrant's common
stock, no par value ("Common Stock"), held by non-affiliates of the registrant
was $83,353,000 based on 21,860,344 shares held by such non-affiliates at the
closing price of a share of Common Stock of $3.813 as reported on the Nasdaq
National Market on such date. Affiliates of the Company, defined as officers,
directors and owners of 10 percent or more of the outstanding shares of Common
Stock, owned 4,886,552 shares of the 26,746,896 shares of Common Stock
outstanding on such date. On February 28,1998, the registrant had outstanding a
total of 26,807,538 shares of Common Stock.

                  DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant's definitive Proxy Statement for its Special Meeting
of Stockholders to be held on May 15, 1998 to be filed with the Securities and
Exchange Commission on or prior to April 3, 1998 (the "1998 Proxy Statement"),
are incorporated by reference into Part III of this Annual Report on Form 10-K.
With the exception of the portions of the 1998 Proxy Statement expressly
incorporated into this Annual Report on Form 10-K by reference, such document
shall not be deemed filed as part of this Annual Report on Form 10-K.


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                               UROMED CORPORATION
                           ANNUAL REPORT ON FORM 10-K

Table of Contents

<TABLE>
<CAPTION>


Item                                                               Page
<S>  <C>                                                           <C>
                                    Part I

1    Business                                                        3
2    Properties                                                     25
3    Legal Proceedings                                              25
4    Submission of Matters to a Vote of Security Holders            25

                                    Part II

5    Market For Registrant's Common Stock
      and Related Stockholder Matters                               26
6    Selected Financial Data                                        27
7    Management's Discussion and Analysis of
      Financial Condition and Results of Operations                 28
8    Financial Statements and Supplementary Data                    34
9    Changes in and Disagreements With Accountants on
      Accounting and Financial Disclosure                           48

                                    Part III

10    Directors and Executive Officers of the Registrant            48
11    Executive Compensation                                        50
12    Security Ownership of Certain
       Beneficial Owners and Management                             50
13    Certain Relationships and Related Transactions                50

                                    Part IV

14    Exhibits and Financial Statement Schedules                    51

</TABLE>

CaverMap(TM), BEACON Technology System(TM), Impress(TM), INTROL(R), Reliance(R),
PelvicFlex (TM), BreastExam(TM), BreastCheck(TM) and BreastView(TM) are
trademarks and registered trademarks of UroMed Corporation. All other trademarks
and trade names referred to in this report are the property of their respective
owners.


                                        2
<PAGE>

PART I

Item 1.  Business

General

UroMed Corporation (the "Company") is a developer, manufacturer and marketer of
male and female healthcare products. The Company has acquired or developed
technology in three core areas: prostate cancer, urinary incontinence, and
breast cancer. The Company has a direct hospital-based business line and a
urinary incontinence consumer-oriented product line. The direct hospital-based
business line is comprised of its CaverMap Surgical Aid, intended to aid
physicians in preserving vital nerves during prostate cancer surgery, its
Iodine-125 radiation seeds for prostate cancer brachytherapy, and its BEACON
Technology System, a minimally invasive incontinence surgical line. In an area
where the Company has decided to seek marketing partners, the Company's
doctor-prescribed ("office-based") continuum of continence care product line
includes the Impress Softpatch, the INTROL Bladder Neck Support Prosthesis, the
Reliance Insert, and the PelvicFlex video. In breast cancer screening, the
Company is developing its investigational BreastView, BreastExam and BreastCheck
electronic palpation technology in order to aid physicians and patients in the
important mission of finding suspicious breast lumps earlier. The Company also
continues to dedicate significant resources to the development and/or
acquisition of product lines that fit into its strategic platforms.

The Company restructured its operations during the first quarter of 1998 to
increase its emphasis on hospital-based sales efforts and to decrease its
investment in the consumer-oriented continence care business, which the Company
believes is best approached through utilizing marketing partners. The
restructuring involved the company-wide reduction of approximately 40 employees.
This initiative is designed to reduce operating costs while allowing the Company
to create a business model with a significantly lower break-even level. The
Company will take a restructuring charge of approximately $1.0 million in the
first quarter of 1998.

The Company has been increasing its emphasis on surgical products, such as the
CaverMap Surgical Aid and the BEACON Technology System, and other treatments for
prostate cancer such as the Iodine-I125 radiation seeds, for which there exist
both large and focused markets. In the U.S., commercial availability of the
BEACON Technology System began in the first quarter of 1998, the CaverMap
Surgical Aid is expected to be commercially available in mid-1998, and the
Iodine-I125 radiation seeds in early 1999. As the BreastCheck technology moves
closer to market, the Company is assessing the optimal commercialization path,
either through direct marketing or via partnerships as well as financing
alternatives for this business. Due to market requirements and opportunities,
the Company has decided to seek one or more marketing partnerships for its
consumer-oriented continence care products: the Impress Softpatch, the INTROL
Bladder Neck Support Prosthesis, the Reliance Insert and the PelvicFlex Video.

The Company's four key objectives for 1998 based on its strategic direction are:
(1) adding new hospital-based products to the commercial marketplace, (2)
seeking partners in order to leverage existing channels of distribution, (3)
lowering the cost structure to create a business model with a significantly
reduced break-even level, and (4) creating visibility and awareness of the large
and emerging opportunities with the Company's breast cancer screening
activities.

Products and Markets

Prostate Cancer

The CaverMap Surgical Aid is a device intended to help physicians improve
prostate cancer surgery outcomes by reducing complications. This device provides
the surgeon with a greater capability to locate and map cavernosal nerve
filaments, thereby enabling the surgeon to make better decisions concerning
tissue extraction in order to best remove the


                                        3
<PAGE>

cancer while sparing nerves vital for potency and other functions. The Company's
patented technology uses state-of-the-art electronics to locate the microscopic
cavernosal nerves that control erectile function. In November 1997, the United
States Food and Drug Administration ("FDA") clearance of the Company's CaverMap
Surgical Aid capped a four-year research and development process.

The market opportunities for the CaverMap system are borne out by health
statistics. Prostate cancer is the second leading cause of cancer-related death
in men, accounting for 36% of cancers and 13% of all cancer deaths, according to
the American Cancer Society. In 1998, an estimated 334,500 men in the United
States and more than 600,000 men worldwide will be diagnosed with prostate
cancer. Because of the advances over the past decade in prostate cancer
screening and early detection, about 60% of these patients will be diagnosed
with early-stage cancer, which can be treated by local radiation treatments or
radical prostatectomy (surgery).

However, surgery does not come without consequences. Erectile dysfunction is
among the most frequent complications of the approximately 100,000 prostate
cancer surgeries performed in the United States each year. For appropriate
patients, prostate cancer surgery represents the best proven chance for a cure
of their condition. However, according to medical studies conducted 12 months
after surgery, erectile dysfunction occurs in about 50% of men who undergo
radical prostatectomy. The Company has focused its development efforts to
address this important problem.

The CaverMap Surgical Aid, which uses technology licensed from Brigham & Women's
Hospital in Boston, Massachusetts and further developed by the Company, has
three major components: the Control Unit, the Probe Handle and the Disposable
Kit. The Control Unit contains the digital and analog electronics, adjustable
controls, user interface, software, and connectors for the Probe Handle and
Disposable Kit. The Probe Handle is the surgeon's interface to control
stimulation. The Probe Handle can be reused, upon re-sterilization after each
surgery. The Disposable Kit contains the Probe Tip, the Tumescence Sensor and
the Patient Return Lead. The Disposable Kit is desiged with components that
ensure maximum effectiveness and use for one patient. The ultra-sensitive probe
tip is used to locate the neurovascular bundles, potentially enabling the
surgeon to spare cavernosal nerves while removing the cancer. The early results
have been promising. A Canadian urologist who conducted a single-center trial of
the CaverMap Surgical Aid found that approximately 90% of patients whose surgery
included use of the CaverMap Surgical Aid had retained sexual function after one
year. The same surgeon saw only a 30% potency rate after one year in his prior
surgical patients whose surgery did not include use of the CaverMap Surgical
Aid. However, no assurances can be made that the CaverMap Surgical Aid will
prove to be this effective in wider trials or in commercial use.

The Company believes that by potentially reducing the frequency of erectile
dysfunction associated with radical prostatectomy, its CaverMap Surgical Aid
offers patients hope of significantly improved quality of life. The Company
intends to launch commercially the CaverMap Surgical Aid in mid-1998.

During the first quarter of 1998, the Company signed an agreement with BEBIG
GmbH for the exclusive right to market BEBIG's Iodine-125 ("I125") seed for
prostate brachytherapy treatment in North and South America, and non-exclusive
rights in other parts of the world. Prostate brachytherapy is a
minimally-invasive procedure in which small radiation sources, or "seeds", are
implanted into the prostate to treat localized cancer. The procedure is
frequently performed on an out-patient basis. According to the terms of the
agreement, BEBIG will design and build an automated manufacturing line, based on
its proprietary technology, at its faciltiy in Berlin, Germany. The agreement
calls for a total commitment by the Company of approximately $1.75 million in
milestone payments to be made if BEBIG's performance goals are met. The Company
intends to launch commercially its Iodine I-125 seeds for prostate cancer
brachytherapy in early 1999.

As a result of the BEBIG agreement, the Company will now be able to pursue two
significant treatment segments for prostate cancer: nerve-sparing prostatectomy,
via the CaverMap Surgical Aid, and brachytherapy, via the I125 seeds.


                                        4
<PAGE>

Continuum of Continence Care

Each year, an estimated 8.5 million women suffer from some form of stress
urinary incontinence. Sufferers have traditionally addressed this condition by
the use of diapers, pads and other limited solutions. In more severe cases,
women undergo surgery in order to address the problem. Incontinence strikes
women of all ages and to varying degrees. The Company's line of urinary
incontinence products complement one another and address various market segments
ranging from mild to severe stress urinary incontinence.

Incontinence Surgery

In August 1997, the Company announced an exclusive license and supply agreement
with Medworks Corporation to market, sell, and distribute Medworks' technology.
This technology is designed to surgically address female stress urinary
incontinence. The Company named its resultant surgical product line the BEACON
Technology System. The Company's minimally invasive BEACON surgical kits address
a focused and important niche in the incontinence market.

The BEACON Technology System is patented and FDA-cleared, and as incorporated
into surgical kits, includes suture guides, suture retrievers, suture cutters
and bone anchors. The proprietary suture guide is used by the surgeon to make
the procedure simpler and more consistent. Surgery conducted utilizing this
technology requires smaller incisions than conventional surgery. The Company
believes that this type of technology can be applied to a portion of the
estimated 160,000 current annual surgical procedures performed by
gynecologists and urologists in the U.S. The Company intends to launch its
BEACON and related incontinence surgical product lines through its direct
hospital salesforce in 1998.

Office-Based Products

The Company believes that the Impress Softpatch holds the most promise of all
of its incontinence products. The Impress Softpatch was
cleared by the FDA for marketing in the United States in May 1996. The Impress
Softpatch is a small, prescription, disposable adhesive patch designed to be
placed externally against the urinary opening to block the leakage of urine in
mild-to-moderate urinary incontinence patients. The Impress Softpatch technology
was acquired from the successor to Advanced Surgical Intervention, Inc. in May
1996 for a combination of cash and shares of Common Stock collectively valued at
$30.0 million. The Company has since developed a commercial manufacturing
process for the Impress Softpatch and has taken delivery of related automated
manufacturing equipment. This equipment is scheduled for operational
qualification in 1998. During the second half of 1997, the Company conducted
initial consumer tests and market analysis for the Impress Softpatch. Based on
the results of these tests, the Company has decided to pursue the potential
over-the-counter ("OTC") market for Impress, in addition to the prescription
("Rx") market. UroMed's application for the OTC market for Impress is currently
under review by the FDA. The Company believes that the best vehicle for
capitalizing on both the OTC and Rx marketplaces is in one or more partnerships
with larger, more established companies. Therefore, UroMed is currently seeking
partnerships, and has decided not to incur Impress launch costs until such
partnerships are in place. Beginning in October, 1997, the Company contracted
the services of JP Morgan & Company, Incorporated to help find and negotiate
attractive partnerships for the Impress Softpatch and arrange other strategic
partnerships for the Company. No assurances can be made that the Company will be
able to locate suitable partners or negotiate and enter into these partnership
arrangements.

The Company's first product entry into the urinary incontinence field was the
Reliance Insert. The Reliance Insert is a small, self-administered, discreet,
single-use device designed to immediately prevent urine leakage caused by stress
urinary incontinence. Similar to a tampon in its use, the Reliance device is
disposable and is inserted directly into the urethra. A balloon at the tip of
the device inflates to block the flow of urine. The device is being utilized by
a small number of women who suffer more severe forms of stress urinary
incontinence and is making a difference in improving the quality of life of its
users. The Reliance Insert was cleared by the FDA for marketing in the United
States in August 1996. The Company completed its manufacturing and marketing


                                        5
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scale-up and commercially launched the product in the United States in November
1996. The financial contribution of the Reliance Insert was minimal for 1996 and
1997 due to the minimal ramp-up of presciptions by U.S. physicians and
the difficulties faced by the Company in persuading physicians and patients to
accept a urethral insert such as the Reliance Insert as a viable alternative to
other competing treatments for urinary incontinence, as well as the resources
that would be needed to overcome these obstacles. The Company does not expect to
actively market the Reliance Insert in 1998, and thus expects a minimal
financial contribution from the product in 1998.

During April 1997, the Company acquired the product line, all associated
license rights and all other rights of Johnson & Johnson Medical, Inc. and
certain of its affiliates to the INTROL Bladder Neck Support Prosthesis. The
INTROL Bladder Neck Support Prosthesis, cleared for Rx marketing in the U.S.
by the FDA in May of 1995, is a patented intravaginal device which is
designed to elevate the bladder neck to its normal anatomical position,
simulating the effect of bladder neck suspension surgery. The Company
initially serviced the small group of physicians who had been trained and
were involved in limited post-FDA clearance marketing of INTROL. The Company
initiated a broader United States launch of INTROL to healthcare
practitioners in July 1997. The Company expects a minimal financial
contribution from INTROL in 1998.

The PelvicFlex Personal Trainer Video is an exercise-training package intended
to assist women who suffer mild forms of urinary incontinence. In the privacy of
their homes, women can use PelvicFlex to learn how to exercise muscles vital to
bladder control. The Company expects a minimal financial contribution from
the PelvicFlex Video.

Breast Cancer

In October 1997, the Company unveiled an innovative and powerful technology
designed to help women and their doctors detect suspicious lumps - often the
early sign of breast cancer. The technology, still in its investigational stage,
is the foundation of three products the Company is creating - BreastCheck,
BreastExam and BreastView - which are currently undergoing clinical evaluation.
The BreastCheck is a hand-held, battery-operated diagnostic device that assists
women in finding suspicious lumps during breast self-examinations. Its sister
product, the BreastExam, addresses a similar challenge physicians face during
clinical breast examinations. BreastView, currently under development, is a
PC-based visual system designed to enable physicians to further evaluate
suspicious breast lumps. Together, these products have the potential to increase
the sensitivity of detection at an earlier stage for both women and physicians.

Research indicates that in the present year, more than 180,000 women will be
diagnosed with breast cancer and nearly 44,000 women will die from the disease.
While breast cancer is not preventable, it is treatable when discovered at an
early stage of development. In fact, the survival rate for breast cancer that is
treated early is nearly 96%, yet only 58% of all breast cancers are discovered
at this stage.

The American Cancer Society recommends that 90 million American women over the
age of 20 perform monthly self-examinations. Women themselves first discover as
much as 80% of breast malignancies. However, the average lump found by women is
often large and at the point where the cancer already may have spread. The
reason for this is two-fold. First, as few as 30% of women over the age of 20
actually conduct monthly breast self-examinations. Second, many women who do
practice regular self-examinations are not adept at discovering lumps of smaller
sizes.

To address these problems, the Company developed the hand-held BreastCheck, a
device designed to provide women with a greater comfort level in regularly
examining their breasts and to potentially improve sensitivity for revealing
suspicious lumps. While breast self-examinations are universally recommended,
many women rely on their doctors for the discovery of lumps or abnormalities.
Physicians perform more than 40 million clinical breast exams annually. Because
the accuracy of clinical exams vary greatly, BreastExam offers a technology
intended to improve patient outcomes and represents an opportunity for
standardization within the healthcare community. Regardless of the expertise of
physicians who perform breast examinations, the Company believes there is a
tremendous need for an adjunct technology that improves this proficiency.
BreastView is aimed towards expanding this capability even further by providing
a PC-based visual system for further evaluation of suspicious breast lumps.


                                       6
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The BreastCheck device utilizes a sensor array comprised of miniature pressure
sensors to electronically palpate the breast. The pressure data is analyzed by
sophisticated computer algorithms for the presence of a lump. Each sensor array
is a thin, flexible device which utilizes opposing rows and columns of
conductive material. The intersection of each row and column form the sensing
location. By separating the rows and columns with a material that varies its
electrical resistance in proportion to the applied load, each intersection
becomes a pressure sensor ("sensel"). The BreastCheck device uses a sensor
containing 16 rows and 26 columns forming an array of 416 individual sensels.
Each row and column is electronically scanned, and the resistance of each sensel
is measured and converted into pressure readings. At any given time, the
collection of 416 sensel readings forms a pressure "image" of the underlying
tissue. As the BreastCheck device is being used, a computer chip inside is
continually analyzing the pressure images. Sophisticated computer algorithms
scan consecutive images to ascertain whether the head of the device is passing
over normal breast tissue or suspicious structures.

The BreastCheck devices works in much the same way as the fingertips during
manual palpation. However, the power of the technology lies in the fact that (1)
the sensors can be made to be even more sensitive than the nerves in the
fingers, (2) the sensor array covers a much larger area than the fingertips at
any given time, and (3) the computer algorithms identify lumps by quantifying
their palpable characteristics, using a potentially more predictable and
consistent method than the subjective analysis of manual palpation.

The Company believes that the total market potential in the United States for
its breast cancer detection products could be large. The Company
believes this technology is unique and offers women and their doctors a simple,
easy-to-use, painless, and cost-effective adjunct to existing, more limited
examination methods. In addition, the Company's market position is protected by
a number of patent licenses and patent filings, although no assurances can be
made that the Company's patent estate will prevent competitors from developing
and marketing competing products.

Currently, this technology is investigational. The Company anticipates
initiating clinical trials and submitting an FDA application in 1998 for an
initial product entry in this area. This technology might be available to women
in the United States in some form as early as late 1999, if and only if, FDA
approval is obtained within that time period.

Marketing and Sales

The Company's direct marketing and sales focus is on the urological
surgical/hospital marketplace with primary efforts in the areas of female
urinary incontinence surgery and prostate cancer treatment. The Company has a
marketing team with dedicated product management in both the incontinence and
prostate surgery areas. The Company employs a direct salesforce comprised of
approximately fourteen field individuals with experience in direct sales to
hospitals. Located in major markets, their role is to advance the Company's
sales and service goals.

Prostate Cancer

Prostate cancer is the most frequently diagnosed cancer (other than skin) in
U.S. men, accounting for nearly 36% of all cancers. While the rate of growth of
new cases has slowed recently, it is believed that new reimbursement guidelines
for screening will encourage physicians to screen more patients and thus uncover
potentially dangerous levels of Prostate-Specific Antigen in men. Today, there
are approximately 100,000 radical prostatectomies done annually in the United
States. These procedures, in most cases, save the lives of patients, but not
without significant consequences. Impotence is a key side effect most often
associated with this procedure. Studies have indicated that if these nerves are
spared during surgery, it can often leave the patient with normal erectile
function. In the U.S., the majority of all prostate cancer surgeries done are
nerve sparing procedures. These cases are often done by only highly trained
surgeons and are concentrated primarily in large teaching institutions.


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Early clinical trials of the CaverMap Surgical Aid indicate that the product
will help the surgeon locate cavernosal nerve bundles and help him or her
decide where to make incisions when removing the prostate. The Company's plan
is to perform additional clinical studies to determine the extent of the
efficacy of CaverMap Surgical Aid. Dr. Patrick Walsh of Johns Hopkins Medical
Insitutions and six of his colleagues plan to undertake a U.S. clinical trial
beginning in early May 1998, with plans to publish the resulting data
sometime during 1999. While the prostate surgery market, without new
technologies entering the marketplace, is expected to begin a slight decline
by the year 2000, the CaverMap Surgical Aid could encourage more patients to
take the path of radical prostatectomy to treat their condition. The Company
plans to introduce initial commercial availability of CaverMap following the
American Urological Association Annual Meeting in late May of 1998. However,
no assurances can be made as to the timing of commercial availability.

A new treatment technology for prostate cancer is in the area of brachytherapy,
whereby radioactive seeds are implanted in and around the prostate, leading to a
less invasive procedure and often times fewer side effects. In March 1998,
UroMed entered into a licensing agreement with BEBIG GmbH which will position
the Company to capitalize on the growth of these procedures. The Company
believes that the number of these procedures may potentially rise to nearly
50% of all treatment therapies for prostate cancer by the year 2005. The
current conditions in the marketplace reflect a significant demand for
brachytherapy treatment; however the supply of radioactive seeds currently
available in the marketplace does not meet current demand.

The UroMed salesforce will be uniquely positioned as one of the few, if any,
sales forces that is focused on nerve sparing and seed therapy which are the two
most concentrated ways of treating this disease. The success of the Company's
marketing effort will be driven largely in part by the results of the U.S.
clinical trials of the CaverMap Surgical Aid, to be led by Dr. Walsh at Johns
Hopkins Medical Institutions and the Company's ability to effectively market
radioactive seeds to multiple call points, the urologist and the radiation
oncologist. This marketing effort will focus the Company on high volume sites
treating prostate cancer. At this point, it is not believed that mass marketing,
via direct mail and advertising, is essential to the success of the Company's
market penetration in 1998 or 1999.

To the Company's knowledge, the CaverMap Surgical Aid does not have any direct
competition. However, the brachytherapy business that the Company recently
entered is expected to become even more highly competitive, starting in late
1998 and early 1999. Nycomed Amersham plc and Johnson & Johnson subsidiary
Indigo Medical Incorporated are currently in the market, with C.R. Bard
Incorporated and Mentor Corporation anticipating market entry in certain
segments later in 1998.

Incontinence Surgery

In the area of female stress urinary incontinence, UroMed has licensed the
rights to market a unique series of kits for the correction of this condition.
The American Urological Association has stated that there are two satisfactory
approaches for most urologists and other treating physicians: The sling
procedure and the retropubic suspension.

In the U.S. there are estimated to be approximately 160,000 procedures done
annually by urologists, urogynecologists and gynecologists to correct female
stress urinary incontinence. The Company primarily targets the urologist, due to
the fact that the the entire product line fits nicely into the practice of this
specialty. Gynecologists perform a significant number of these procedures,
however the cases are spread among thousands of physicians typically performing
very few cases per month. While the Company will have gynecology customers,
urologists and urogynecologists currently perform the highest monthly volume of
procedures.

The Company's direct selling effort will include kits for a variety of stress
incontinence procedures. The Beacon Technology System is designed to facilitate
current techniques for a variety of procedures from both an
open-procedure/mini-incision technique to the minimally invasive laparoscopic
technique.


                                        8
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The Company's BEACON Technology System marketing effort is geared toward
surgeon-to-surgeon training through a training program designed and operated
by the Company. This program allows surgeons from around the country to learn
new procedures from peers in their geographic region. The market for the
Beacon Technology System kits is extremely competitive. Boston Scientific
Corporation is the key competitor in this disposable stress incontinence
surgical kit market with other companies challenging them with bone anchors
and other devices. Boston Scientific Corporation is currently the leader in
market share.

Office-Based Continence Care Products

During the second half of 1997, the Company conducted initial consumer tests and
market analysis for the Impress Softpatch. Based on the results of such tests
and the required resources to establish a substantial market penetration, the
Company has decided to pursue the potential OTC market for Impress, in addition
to the Rx market. The Company believes that the best vehicle for capitalizing on
both the OTC and Rx marketplaces is in partnership or partnerships with larger,
more established companies. Therefore, the Company is currently pursuing
partnerships, and has decided not to incur launch costs until such
partnership(s) are in place.

The Company launched the Reliance Insert in the United States market during 1996
and 1997. This included a launch phase focused on account development to build a
core set of users of the product, an expanded launch phase intended to increase
and create awareness and interest among a larger group of physicians and the
public, and a final stage to create consumer awareness though direct promotion,
which included an advertising and public relations campaign. The financial
contribution of the Reliance Insert in the United States was minimal in 1996 and
1997. The Company does not expect to actively market the product directly in the
United States during 1998, and thus expects a minimal financial contribution
from the product in 1998.

In late 1995 and 1996, the Company commercialized the Reliance Insert in certain
international markets through marketing and sales agreements with the following
companies: E. Tosse & Co. GmbH of Germany, Porges, S.A. of France and Astra Tech
AB based in Scandinavia. All revenues recognized in 1995 and prior, and most of
the total revenue recognized in 1996 and 1997 were a result of the revenue
recognized from these agreements. The Company and its international partners are
presently not actively marketing the Reliance Insert internationally and the
Company does not anticipate active marketing in 1998.

Many of the Company's competitors and potential competitors have significantly
greater financial, manufacturing, marketing, distribution and technical
resources and experience than the Company. It is possible that other large
medical, health care and consumer products companies may enter these industries
in the future. Furthermore, smaller companies, academic institutions,
governmental agencies and other public and private research organizations will
continue to conduct research, seek patent protection and establish arrangements
for commercializing products. Such products may compete directly with any
products which may be offered by the Company. Finally, competitors in the
medical device industry have in the past and may in the future employ litigation
to gain a competitive advantage.

Manufacturing, Distribution and Key Suppliers

Prostate Cancer

The CaverMap Surgical Aid System consists of three major components. The Control
Unit contains the digital and analog electronics, adjustable controls, user
interface, software, and connectors for the Probe Handle and the Disposable Kit.
The reusable Probe Handle is the surgeon's interface to control stimulation. The
Disposable Kit contains the Probe Tip, the Tumescense Sensor and the Patient
Return Lead. The Disposable Kit is designed for and has components that ensure
maximum effectiveness for use for one procedure. Currently, all of the
components are procured from outside vendors with final testing and acceptance
occurring at UroMed's facility in Needham, Massachusetts. The


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<PAGE>

Company plans to distribute the CaverMap Surgical Aid directly to medical
institutions and physicians if and when it becomes commercially available.

Incontinence Surgery

UroMed entered into a seven-year exclusive license and supply agreement with
Medworks Corporation of Louisville, KY to market, sell and distribute
Medworks surgical technology. The FDA-cleared BEACON Technology System
currently includes suture guides, suture retrievers, suture cutters and bone
anchors. The Company has signed a letter of intent with Innovasive Devices,
Inc. for Innovasive to supply its bone anchoring system to the Company to be
used in conjunction with the Company's surgical technology. This agreement,
when and if finalized, would give UroMed the exclusive distribution rights
with respect to Innovasive bone anchors and ancillary devices to the U.S.
incontinence market. To date the Company and Innovasive Devices, Inc. have
been unable to agree to final terms for their relationship, and the Company
can make no assurances that it will enter into a definitive agreement with
Innovasive Devices. If the Company is unable to enter into such an
arrangement, the Company may be required to obtain bone anchors from another
source. The primary innovative element in each of the Beacon Technology
System kits is a proprietary suture guide which is used by the surgeon to
make the procedure simpler, more consistent and less traumatic. Medworks
Corporation assembles the kits' components and upon acceptance by the
Company, the kits are transferred to Louisville Labs Inc. of Louisville,
Kentucky for shipment to UroMed's customers upon receipt of orders. The
Company has also entered into a distribution agreement with Louisville Labs,
Inc.

Office-Based Continence Care Products

During the first quarter of 1998, the Company began distributing of its U.S.
office-based continence care products from its Needham, Massachusetts facility.
In 1997 and prior years, distribution of these products were from its licensed
pharmacy facility in Nashua, New Hampshire. This distribution system has an
emphasis on direct distribution to and interaction with consumers. First, a
physician authorizes the use of the product for a patient under ("Doctor's
Orders"). Next, his or her office staff or the patient telephones or faxes the
order to the Company. Next, the patient is encouraged to telephone the Company's
customer service center directly to confirm the order and arrange for payment.
Orders are processed at a Company's facility located in Needham, Massachusetts,
and then the product is sent directly to patients in a discreet package.

The Company markets a Reliance Insert starter kit to each new patient. Each kit
contains two Reliance applicators, a mirror to assist the patient in the initial
applications of the Reliance Insert, and 20 Reliance Inserts. After this initial
purchase, the Company markets additional Reliance Inserts to its customers in
refill packs of 20 or 50 Reliance Inserts. The Impress Softpatch is marketed in
packs of 24 and 48, and the Introl Bladder Neck Support Prosthesis is marketed
as individual units.

The Company also fills orders placed directly from individual pharmacies or
doctors for patients not electing to deliver their prescriptions directly to the
Company. The Company is considering adopting other distribution strategies in
the future.

The Company developed a commercial stage manufacturing process for the Impress
Softpatch because Advanced Surgical Intervention, Inc., the company which
originally developed the Impress Softpatch, never progressed to the stage of
commercial manufacturing of the Impress Softpatch. The Company developed this
manufacturing process during 1996 and 1997 and received the manufacturing
assembly equipment from a vendor factory in December 1997. The equipment passed
vendor factory acceptance and was installed at the Company's Needham
headquarters in the first quarter of 1998. The Company is currently going
through its internal validation of this manufacturing equipment and expects this
to be completed during 1998.

The Company expended substantial efforts on manufacturing activities for
commercialization of the Reliance Insert in the United States and abroad. The
Company developed and automated its manufacturing process in order to achieve
high volume, high quality production; however, it is currently producing the
Reliance Insert in extremely low-level commercial quantities. The Company
currently has one line of automated assembly equipment installed at its Needham,
Massachusetts facility.


                                       10
<PAGE>

The Company's manufacturing facility for the Impress Softpatch and the Reliance
Insert, as an FDA-registered facility subject to "Quality System Regulation,"
is subject to regulation and periodic inspection by the FDA. See "--Properties."

Third-Party Reimbursement

Reimbursement for patient management products of urinary incontinence is
generally not available. The Company has been successful, however, in securing
agreements with managed care organizations representing approximately 50 million
covered lives. With respect to the Company's surgical products in the United
States, third party reimbursement is generally available for surgical procedures
for incontinence and prostate surgery.

Research and Development

The Company believes that its future success will depend in large part upon
its ability to complete all investigational and development work associated
with its Breastcare Business including BreastCheck, BreastExam and
BreastView, to build its Urology business including continued clinical
success with CaverMap Surgical Aid, development of the brachytherapy seeds
and other efforts, and to enhance its existing products and to develop other
new products. Accordingly, the Company intends to continue to devote
significant funds and efforts to research and development. The Company
currently employs 24 individuals on a full-time basis for its research and
development efforts. The Company incurred research and development expenses
of $11,692,000, $37,597,000 and $6,821,000 for the years ended December 31,
1997, 1996 and 1995, respectively.

The Company believes that there is potential for improvement in the diagnosis
and treatment of a number of urological and gynecological disorders. The Company
believes that advancements in urology and gynecology have been hampered by the
relatively smaller amounts of research and development resources dedicated to
these disciplines as compared to other areas, such as cardiology.

The Company believes that a critical aspect of its strategy is to partner,
license and create joint ventures for certain technologies and products that can
diagnose and treat urological and gynecological disorders. Future success is
dependent upon the Company's ability to identify, contract and support these
opportunities.

Patents and Proprietary Rights

The Company's success will depend in part on its ability to obtain and maintain
patent protection for its products, to preserve its trade secrets and to operate
without infringing the proprietary rights of third parties. The Company's
strategy regarding the protection of its proprietary rights and innovations is
to seek patents on those portions of its technology that it believes are
patentable and to protect as trade secrets other confidential and proprietary
information.

The Company believes that its patents, and any additional patents which may be
issued pursuant to these applications and any continuations or
continuations-in-part, may provide the Company with a substantial competitive
advantage. However, there can be no assurance as to the degree of protection
offered by any of these patents or that any patents will be issued with respect
to the Company's pending patent applications.

Some of the technology used in the Company's products is not covered by any
patent or patent application of the Company. The Company seeks to maintain the
confidentiality of its proprietary technology by requiring employees who work
with proprietary information to sign confidentiality agreements and by limiting
access by parties outside the Company to such confidential information. There
can be no assurance, however, that these measures will prevent the unauthorized
disclosure or use of this information, or that others will not be able to
independently develop such information. Moreover, as is the


                                       11
<PAGE>

case with the Company's patent rights, the enforcement by the Company of its
trade secret rights can be lengthy and costly, with no guarantee of success.

To date, no claims have been brought against the Company alleging that its
technology or products infringe intellectual property rights of others. However,
there can be no assurance that such claims will not be brought against the
Company in the future or that any such claims will not be successful.

Prostate Cancer

The Company presently holds an exclusive license for two issued United States
patents and has received notice from the United States Patent Office that all
claims were approved for a third patent for the CaverMap(TM) Surgical Aid.
The first two patents have been licensed from Brigham and Women's Hospital
with exclusive rights to the Company. The third patent (with claims approved)
is held jointly by the Company and Brigham and Women's Hospital, and the
Company has exclusive rights. International patent applications are pending
as well. The Company believes that the issued patents and allowed claims
which cover both method and device are a competitive advantage for the
Company.

The Company has selected the name CaverMap for this product and has filed an
application for trademark registration in the United States and other countries.
However, there can be no assurance that the Company will receive trademark
registration for the name CaverMap in the United States or in any other
countries in which the Company may want to market and sell the CaverMap Surgical
Aid.

Incontinence Surgery

The Company's agreement with Medworks Corporation (the "Medworks Agreement")
allows the Company use of specifically identified licensed products, some option
products and other future Medworks products. Medworks Corporation presently has
two issued patents and six pending patent applications as it pertains to the
specifically identified license products referenced in the Medworks Agreement.
The two issued patents cover the suture retriever and the suture guide. The six
pending patents are for various tools. As it pertains to the licensed products
in the Medworks agreement, Medworks is required to use all commercially
reasonable efforts to prosecute all existing patent applications relating to the
Medworks technology and must not allow any of these patents to expire,
terminate, lapse, not be renewed or otherwise cease to be in force over the term
of the Medworks Agreement.

The Company selected the name BEACON Technology System and BTS for its
incontinence surgical line. The Company has filed applications for trademark
registration in the United States. However, there can be no assurance that the
Company will receive trademark registration for the names BEACON Technology
System and BTS in the United States or any other countries in which the Company
may want to market and sell the BEACON Technology System.

Office-Based Continence Care Products

As of December 31, 1997, the Company held seven issued United States patents and
had eleven additional United States patent applications and various foreign
patent applications pending relating to the Company's technology underlying the
Reliance Insert and other related products. The Company believes that the
primary issued United States patent relating to the Reliance Insert, which
includes both method and device claims and expires in the year 2010, contains
broad claims relating to the construction and use of expandable remove-to-void
urethral plugs.

The Company holds two patents and has one patent application pending with
respect to the Impress Softpatch and related products. The issued patents
relating to the Impress Softpatch and related products include device claims and
expire in the year 2011. The application filed by the Company with respect to
the Impress Softpatch and related technology contain both method and device
claims.


                                       12
<PAGE>

The Company has received trademark registration for the use of the name Reliance
in the U.S. and in other countries. In 1995, after becoming aware that another
company, Howmedica, Inc. claimed rights to the name Reliance in several
countries, the Company entered into an agreement with Howmedica, Inc. which
permits each party use of the name Reliance for its specific product areas in
those countries where both parties have filed or will file for registration.
There can be no assurance that such trademark or the Company's use thereof will
not be challenged, invalidated, prevented or circumvented in the future.

The Company has licensed, on an exclusive basis, the rights to the United States
patents and various foreign patents relating to the INTROL product line and its
technology. The primary patent contains broad claims relating to intra-vaginal
incontinence devices and expires in the year 2012.

In addition to the proprietary protection afforded by the Company's intellectual
property activities, the Company believes that the production processes that it
has developed for the Reliance Insert and the Impress Softpatch, involving the
production of components in high volumes, at competitive prices and with low
fault tolerances, are assets of the Company, because it believes that any
potential competitor attempting to produce an expandable urethral plug, external
adhesive barrier devices or similar devices would also have to develop
production processes involving the production of components at high volumes, at
acceptable costs and at very low fault tolerances in order to compete
effectively.

The Company selected the name Impress Softpatch for its adhesive patch
incontinence device. The Company has filed an application for trademark
registration in the United States and will file applications for appropriate
trademark registrations in Europe and other countries for the Impress Softpatch.
However, there can be no assurance that the Company will receive trademark
registration for the name Impress Softpatch in the United States or in any other
countries in which the Company may want to market and sell the Impress
Softpatch.

The Company acquired the registered trademark for the INTROL product line in
1997. Also included are registered trademarks in Europe and various other
countries. There can be no assurance, however, that this trademark or the
Company's use thereof will not be challenged, invalidated or otherwise cease to
be in force.

Breast Cancer

The Company currently has seven United States patents pending. In February 1998,
the Company received a favorable office action from the U.S. Patents Office on
its first application entitled "Tissue Examination". These are broad patent
applications covering the electronic palpation of tissue and the Company
believes that the proprietary position will be an important competitive
advantage. In addition, during 1997 the Company signed a technology and supply
agreement with a manufacturer and developer of sensor arrays and the agreement
includes an exclusive license to their four U.S. and numerous foreign patents
covering sensor technology and manufacturing. The Company also has additional
foreign patent filings pending.

The Company has selected the names BreastExam, BreastCheck and BreastView for
its line of breast cancer screening products. The Company has filed applications
for trademark registration for each of these product names for use in the United
States. However, there can be no assurance that the Company will receive
trademark registration for the names BreastExam, BreastCheck and BreastView in
the United States or any other countries that the Company may want to market and
sell these products.


                                       13
<PAGE>

Regulatory

Prostate Cancer

The Company received regulatory clearance by the FDA in November 1997 to
market the CaverMap Surgical Aid in the U.S. The clearance was via a 510(k)
application and the pre-clinical and clinical testing included a variety of
physical tests conducted to characterize its physical properties, safety
margins, and failure modes, as part of a failure modes and effects analysis.
In addition, extensive biocompatability testing was conducted on the
materials that will have human contact to demonstrate that the materials were
biocompatible, suitable and safe for their intended use. A single center
clinical study was conducted to determine if the CaverMap Surgical Aid
provides electrical stimulation to the cavernosal nerves during radical
prostatectomy procedures. The results of the study indicated that the
CaverMap Surgical Aid provides an electrical charge to stimulate the
cavernosal nerves and elicits a measurable response in tumescence. No
reported adverse events were associated with the device's use. Additional
clinical evaluations are ongoing.

Incontinence Surgery

Medworks Corporation received FDA clearance in 1997 to market surgical
components for stress urinary incontinence. UroMed will market and distribute
these components as BEACON Technology System surgical kits, and as part of their
Medworks Agreement, has license rights to distribute these kits.

Office-Based Continence Care Products

The Company received final regulatory approval from the FDA to market the
Reliance Insert in the United States in August 1996. This clearance was granted
on the basis of clinical trial data included in a Pre-Market Approval ("PMA")
application originally filed by the Company as a shorter-form 510(k)
Notification application in December 1994. The FDA's final approval of the
Company's PMA was granted conditioned upon final labeling review, which has been
completed, and an undertaking to complete a five-year post-market surveillance
study covering 150 patients designed to determine (i) the degree of urinary
tract bacteriology associated with use of the device, including type and
frequency of symptomatic bacteriuria, and (ii) the long-term effect of use of
the device on urethral integrity.

FDA clearance to market the Impress Softpatch was granted in May 1996 on the
basis of a 510(k) Notification application originally filed, based on the
clinical trial data compiled, by Advanced Surgical Intervention, Inc. in
September 1995. FDA clearance was issued without the requirement that a
post-market surveillance study be conducted with respect to use of the Impress
Softpatch or subject to any other conditions.

The INTROL Bladder Neck Support Prosthesis was cleared for marketing in the
United States by the FDA in May 1995 via a 510(k) application filed by Johnson &
Johnson Medical, Inc. A clinical trial was conducted to support the safety and
effectiveness of the INTROL Bladder Neck Support Prosthesis for the treatment of
stress urinary incontinence.

Breast Cancer

Because there are no devices similar to the BreastCheck product, the Company
is required to obtain FDA clearance through the Pre-Market Approval ("PMA")
process, which typically is longer the the 510(k) approval process. The
Company has had several meetings with representatives from the FDA, and a
clinical protocol has been designed. The Company has been granted Expedited
Review Status from the FDA. While the Company has completed numerous
non-significant risk U.S. clinical trials involving over 600 women, certain
formal clinicals are not anticipated to

                                       14
<PAGE>

begin until later in 1998. The Company does not expect to launch this product
until late 1999 at the earliest, which will require that FDA approval be
obtained within that time frame.

Government Regulation

The Reliance Insert, the Impress Softpatch, the INTROL Bladder Neck Support
Prosthesis, the CaverMap Surgical Aid, and the BreastExam, BreastCheck and
BreastView devices, as well as certain products currently under development by
the Company, are regulated as medical devices by the FDA under the Federal Food,
Drug and Cosmetic Act (the "FDC Act") and require regulatory clearance prior to
commercialization in the United States. Under the FDC Act, the FDA regulates
clinical testing, manufacturing, labeling, distribution and promotion of medical
and surgical devices in the United States. Various states and other countries in
which the Company's products may be sold in the future may impose additional
regulatory requirements.

Following the enactment of the Medical Device Amendments to the FDC Act in May
1976, the FDA classified medical devices in commercial distribution into one of
three classes, Class I, II or III. This classification is based on the controls
necessary to reasonably ensure the safety and efficacy of medical devices. Class
I devices are those whose safety and efficacy can reasonably be ensured through
general controls, such as adequate labeling, pre-market notification and
adherence to FDA-mandated "Quality System Regulation." Generally, Class II
devices are those whose safety and efficacy can reasonably be ensured through
the use of special controls, such as performance standards, post-market
surveillance, patient registries and FDA guidelines. Class III devices are
devices which must receive pre-market approval by the FDA to ensure their safety
and efficacy, generally life-sustaining, life-supporting or implantable devices,
and also include all new not substantially equivalent devices introduced after
May 28, 1976. The Reliance Insert is a Class III device, and the Impress
Softpatch is a Class II device.

If a manufacturer or distributor of medical devices can establish that a new
device is "substantially equivalent" to a legally marketed Class I or Class II
medical device or to a Class III medical device for which the FDA has not
required pre-market approval, the manufacturer or distributor may seek FDA
marketing clearance for the device by filing a 510(k) Notification application.
The 510(k) Notification application and the claim of substantial equivalence may
have to be supported by various types of information indicating that the device
is as safe and effective for its intended use as a legally marketed predicate
device and a 510(k) Notification application may require the submission of data
including clinical data.

Following submission of the 510(k) Notification application, the manufacturer or
distributor may not place the device into commercial distribution until an order
is issued by the FDA. The FDA has no specific time limit by which it must
respond to a 510(k) Notification application. The FDA may agree with the
manufacturer or distributor that the proposed device is "substantially
equivalent" to another legally marketed device, and allow the proposed device to
be marketed in the United States. The FDA may, however, determine that the
proposed device is not substantially equivalent, or may require further
information, such as additional clinical test data, before it is able to make a
determination regarding substantial equivalence. Such determination or request
for additional information could delay the market introduction of a product. FDA
clearance for the Impress Softpatch was granted on the basis of a 510(k)
Notification application originally filed by Advanced Surgical Intervention,
Inc.

If a manufacturer or distributor cannot establish to the FDA's satisfaction that
a new device is substantially equivalent to a legally marketed medical device,
the manufacturer or distributor will have to seek pre-market approval or
reclassification of the device. A PMA, which must prove that a device is safe
and effective, must be supported by extensive data, including preclinical and
clinical trial data, to demonstrate the safety and efficacy of the device. Upon
receipt, the FDA will conduct a preliminary review of the PMA to determine
whether the submission is sufficiently complete to permit a substantive review.
If sufficiently complete, the submission is declared fileable by the FDA. By
regulation, the FDA has 180 days to review a PMA after it has been determined to
be fileable. While the FDA has at times responded to PMA's within the allotted
time period, PMA reviews more often occur over a longer time period and
generally take


                                       15
<PAGE>

approximately two years or more from the date of filing to complete. A number of
devices for which FDA marketing clearance has been sought have never been
cleared for marketing. FDA approval for the Reliance Insert was granted on the
basis of a PMA originally filed by the Company as a 510(k) Notification
application in December 1994.

After approval is granted on the basis of a PMA, continued market clearance is
contingent upon the submission of annual post-clearance reports required by FDA
regulations. In addition to the general requirements of the FDA regulations for
post-clearance reports, the FDA approval of the Reliance Insert requires that
post-clearance reports contain an evaluation of the long-term effects of the
Reliance Insert, including the results of a five-year post-marketing
surveillance study covering 150 patients designed to determine (i) the degree of
urinary tract infection associated with use of the device, including type and
frequency of symptomatic bacteriuria, and (ii) the long-term effect of use of
the device on urethral integrity. Subject to certain exceptions, changes to an
approved device, including the materials used therein, and its manufacturing and
quality processes, require additional submissions to the FDA. If the FDA
believes that the Company is not in compliance with applicable law and
regulations, the FDA can take one or more of the following actions: withdraw
previously approved applications; require notification to users regarding newly
found, unreasonable risks; request repair, refund or replacement of faulty
devices; request corrective advertisements, formal recalls or temporary
marketing suspension; refuse to review or clear applications to market any of
the Company's future products in the United States or to allow the Company to
enter into government supply contracts; or institute legal proceedings to detain
or seize products, enjoin future violations or assess criminal penalties against
the Company, its officers or employees.

If a manufacturer commercializes a medical device, it is required to register
with the FDA and to list all of its devices. In addition, any such manufacturer
will be subject to inspection on a routine basis for compliance with the FDA's
Quality System Regulation. The Company's facility in Needham, Massachusetts, was
registered with the FDA and successfully passed an inspection in connection with
the Company's PMA application for the Reliance Insert. The FDA's regulations
also require that such manufacturer manufacture its products and maintain its
documents in a prescribed manner with respect to manufacturing, testing and
quality control activities. Further, such manufacturer is required to comply
with various FDA requirements for labeling and reporting of adverse reactions,
and may be required to meet rules governing product tracking and post-market
surveillance. See "--Properties."

In order to qualify for CE Marking, the manufacturer must comply with the
Essential Requirements of the MDD. These relate to safety and performance. In
order to demonstrate compliance with these requirements of the MDD, the
manufacturer must undergo conformity assessment which depends on the class of
the product. The Company chose as its conformity assessment type testing of the
product by a Notified Body and assessment of the manufacturer's quality system
used in production by a Notified Body. In February 1996, representatives of the
Notified Body chosen by the Company reviewed the Company's facility and
operations in Needham, Massachusetts, for conformity to the Essential
Requirements of the MDD and Annex. Upon conclusion of the inspection, the
representative recommended to the Notified Body that the Company be granted
approval to use the CE Mark, and in March 1996 the Company received
certification of eligibility to use the CE Mark on the Reliance Insert and any
accessories for the Reliance Insert sold in Europe. The Company intends to apply
to its Notified Body to gain the ability to affix the CE Mark to the Impress
Softpatch in advance of any contemplated commercialization of such product in
Europe. Any such application, if granted, would eliminate the need to acquire
many of the additional regulatory approvals otherwise required to market the
products in Europe.


                                       16
<PAGE>

Employees

As of December 31, 1997, the Company employed approximately 140 individuals on a
permanent basis and 15 on a temporary basis. The restructuring in the first
quarter of 1998 involved the reduction in work force company-wide of
approximately 40 employees.

None of the Company's employees are covered by collective bargaining agreements.

                 FORWARD-LOOKING STATEMENTS AND ASSOCIATED RISKS

Certain statements contained in this Annual Report may be considered forward
looking statements within the meaning of Section 27A of the Securities Act of
1933 and Section 21E of the Securities Exchange Act of 1934, including
statements in Item 1 "Business" regarding (i) the planned progression of the
Company's commercialization strategies for the Impress Softpatch, the INTROL
Bladder Neck Support Prosthesis, the BEACON Technology System surgical line,
the CaverMap Surgical Aid, BEBIG's Iodine I-125 seeds, and BreastCheck,
BreastExam and BreastView, including the timing and extent of initial or
other sales, (ii) consumer acceptance of the use of the Impress Softpatch and
the INTROL Bladder Neck Support Prosthesis as strategies for the self-care of
urinary incontinence, (iii) the Company's expectations regarding its research
and development and in-licensing activities, including but not limited to the
BEACON Technology System surgical line, the CaverMap Surgical Aid,
BreastCheck, Breast Exam, and BreastView devices, (iv) the timing related to
the commencement of marketing activities for the commerical launches of the
BreastCheck, BreastExam, and BreastView devices, Impress Softpatch, BEACON
Technology System, and the CaverMap Surgical Aid, (v) the timing related to
regulatory clearance for the BreastCheck and BreastExam devices, (vi) the
Company's planned uses for its cash and other liquid resources, (vii) the
Company's expectations regarding its 1998 restructuring, (viii) the extent of
future revenues, expenses and results of operations and the sufficiency of
the Company's financial resources to meet planned operational costs and other
expenditure needs, and (ix) the Company's expectations regarding the size of
the markets for its products. These forward-looking statements are based
largely on the Company's expectations and are subject to a number of risks
and uncertainties, many of which are beyond the Company's control. Actual
results could differ materially from these forward-looking statements as a
result of certain factors, including those described below:

 - The uncertainty that the Impress Softpatch, the INTROL Bladder Neck
Support Prosthesis, the BEACON Technology System, the CaverMap Surgical Aid,
and the BreastExam, BreastCheck and BreastView will gain market acceptance
either among physicians or consumers in the United States.
 - The uncertainty that physicians will prescribe the Impress Softpatch and
the INTROL Bladder Neck Support Prostheses in significant numbers.
 - The uncertainty that the Company will be able to develop an effective
sales force and implement a successful marketing campaign for the BEACON
Technology System, the CaverMap Surgical Aid, and the BreastCheck, BreastExam
and BreastView in the United States.
 - The uncertainty that the Company will be able to develop effective
partnerships to pursue over-the-counter ("OTC") and prescription ("Rx")
outlets for the Impress Softpatch.
 - The uncertainty of receiving regulatory clearance for the Company's
BreastCheck, BreastExam, and BreastView devices and OTC approval for the
Impress Softpatch.
 - The Company's dependence on others for raw materials and certain
components of its products, including certain materials available only from
single sources.
 - The uncertain protection afforded the Company by its patents and/or other
intellectual property rights relating to the Impress Softpatch, the INTROL
Bladder Neck Support Prosthesis, the BEACON Technology System, the CaverMap
Surgical Aid, and BreastCheck, BreastExam and BreastView.
 - The uncertainty as to whether the Company will be able to manufacture,
market and sell its products at prices that permit it to achieve satisfactory
margins in the production and marketing of its products.

                                       17
<PAGE>

 - Risks relating to FDA or other governmental oversight of the Company's
operations, including the possibility that the FDA could impose costly
additional labeling requirements on, or restrict the marketing of, the Company's
products, or suspend operations at one or more of the Company's facilities.
 - The uncertainty of the size of the potential markets based on such technology
and the coordination of products based on such technology with UroMed's other
products of the CaverMap Surgical Aid, the BEACON Technology surgical kits, and
BreastCheck, BreastExam and BreastView.

                                  RISK FACTORS

The Company's financial condition and results of operation, as well as the
market price for the Company's outstanding securities, are also likely to be
affected by the following factors:

Uncertainty of Market Acceptance for the Company's Products

The BEACON Technology system, the CaverMap Surgical Aid and the BEBIG Iodine
I-125 seeds will be competing against existing treatments and surgical products
in the urinary incontinence and prostate cancer markets, respectively. The
Impress Softpatch and the INTROL represent a new approach to managing certain
types of female UI. There can be no assurance that any of the Company's products
will gain any significant degree of market acceptance. The Company believes that
recommendations by physicians will be essential for market acceptance of both
the Impress Softpatch and the INTROL, which are and will be marketed on a
prescription basis and potentially an over-the-counter basis for the Impress
Softpatch, and there can be no assurance that any such recommendations, if such
recommendations are ever made, will be followed. In addition, there can be no
assurance that the Impress Softpatch and the INTROL will be accepted by female
UI sufferers in the United States or abroad. The Impress Softpatch and INTROL
are each patient-managed therapies and as such patients may at any time decide
to discontinue their use. Results of the clinical trials of the Impress
Softpatch indicated that some patients experienced slight tissue irritation
after use of that device and that 48% of the patients were unable to report that
they were completely dry when using the device. Although the safety and efficacy
of the Impress Softpatch and INTROL were each deemed to be sufficient for
clearance by the FDA, there can be no assurance that either product will
continue to prove to be safe and effective over the long-term and after wider
use.

Dependence on Few Products

The Company expects to derive a substantial part of its revenues for the next
several years from sales of the Impress Softpatch, the BEACON Technology system,
the CaverMap Surgical Aid and BEBIG's Iodine I-125 seeds. The Company's failure
to commercialize successfully all of these products would have a material
adverse effect on the Company's business, financial condition and results of
operations. The Company does not expect that commercialization of other new
product will be feasible without a substantial, continuing commitment to
research and development for an extended period of time or acquisitions of new
properties, or both. Also, the development of any new products may require that
such products will be subject to clinical trials and regulatory clearance or
approval before commercialization. There can be no assurance as to whether or
when commercialization of other products might begin or as to the likelihood
that any such initiative would be successful. See "Business--Research and
Development."

Limited Manufacturing Capability and Experience

The Company has limited experience in manufacturing commercial quantities of the
Impress Softpatch and has not manufactured significant quantities of any other
products. The


                                       18
<PAGE>

Company may not be able to develop sufficient capacity or capability to produce
the quantities of the Impress Softpatch that may be required to support its
sales.

Dependence on Others for Components and Raw Materials

Certain of the raw materials for the manufacture and assembly of the Company's
products are available only from single sources and are manufactured by third
parties. Interruptions in supplies of raw materials may occur as a result of
business risks particular to such suppliers or the failure of the Company and
any such supplier to agree on satisfactory terms. Such sources may also decide
for reasons beyond the control of the Company, such as concerns about potential
medical product liability risk in general, to cease supplying such materials or
components for use in medical devices generally. In the event of such an
interruption, alternative sources of raw materials or components may be limited.
The Company is currently a party to supply agreements with only some of its key
suppliers and may not be able to obtain agreements with some of its suppliers of
raw materials or components if it so desires. In the event that the Company
replaces its current raw materials used in the Reliance Insert or Impress
Softpatch with alternative materials, such product, as modified, may require new
FDA and other regulatory approvals, and additional clinical and other testing
may be required in order to obtain such approvals. Any interruption in the
supply of raw materials currently used by the Company or any components
incorporated in the Reliance Insert, or the usage of any alternative raw
materials, would have a material adverse effect on the Company's business,
financial condition and results of operations.

Lack of Marketing and Sales Experience

Although the FDA has approved or cleared the BEACON Technology System, the
CaverMap Surgical Aid, the Impress Softpatch, the INTROL Bladder Neck Support
Prosthesis and the Reliance Insert for marketing in the United States, the
Company has sold only limited amounts or no quantities for each. The Company has
developed a direct marketing and sales group in the United States for its
products. However, there can be no assurance that the Company has built an
effective sales force, will be able to continue to attract and retain a
qualified marketing and sales group in the United States, or can otherwise
design and implement an effective marketing and sales strategy for the BEACON
surgical kits, the CaverMap Surgical Aid, BEBIG Iodine I-125 seeds,the Impress
Softpatch, and BreastCheck, BreastExam and BreastView, or any future product
developed by the Company.

Limited Operating History; History of Losses; Profitability Uncertain

The Company has experienced significant operating losses since inception and, as
of December 31, 1997, had an accumulated deficit of $105.9 million, including
$30.2 million relating to the acquisition of the Impress Softpatch technology
and related expenses. In addition, the development and commercialization by the
Company of its products and other new products, if any, will require substantial
product development expenditures for the foreseeable future. The Company's
future profitability is dependent upon its ability to successfully commercialize
these products. There can be no assurance that the Company will generate
sufficient cash flow to pay interest and principal on its $69,000,000 aggregate
principal amount 6% Convertible Subordinated Notes due October 15, 2003 (the
"Notes") or to achieve continued profitability. The Company expects its
operating losses to increase over the foreseeable future and there can be no
assurance that the Company will be profitable in the future or that the
Company's existing capital resources and any funds provided by future operations
will be sufficient to fund the Company's needs, or that other sources of funding
will be available.

Lack of Distribution Experience

The Company has limited experience in distributing units of its products to its
ultimate consumers. In Europe, where nearly all of the sales of the Company's
products have been made to date, the Company relied on the distribution systems
of third party distributors.


                                       19
<PAGE>

Competition and Technological Advances

The prostate cancer treatment and incontinence surgery and incontinence product
industries are highly competitive. The Company's ability to compete in the
urinary incontinence management field will depend primarily upon physician and
consumer acceptance of the Reliance Insert and the Impress Softpatch,
consistency of product quality and delivery, price, technical capability and the
training of health care professionals and consumers. Other factors within and
outside the Company's control will also affect its ability to compete, including
its product development and innovation capabilities, its ability to obtain
required regulatory clearances, its ability to protect the proprietary
technology included in its products, its manufacturing, marketing and
distribution capabilities and its ability to attract and retain skilled
employees. Certain of the Company's competitors have significantly greater
financial, technical, research, marketing, sales, distribution and other
resources.

Risks Relating to FDA Oversight and Other Government Regulation

The facilities at which the Company manufactures its products, are subject to
regulation by the FDA and, in many instances, by comparable agencies in the
foreign countries in which these devices are distributed and sold. Although
approval to market the Reliance Insert and clearance to market Impress Softpatch
in the United States has been granted by the FDA, the process of obtaining
regulatory approvals for the marketing and sale of any additional products, or
the modification of existing products, by the Company could be costly and
time-consuming and there can be no assurance that such approvals will be granted
on a timely basis, if at all. The regulatory process may delay the marketing of
new products for lengthy periods, impose substantial additional costs and
furnish an advantage to competitors who have greater financial resources.
Moreover, regulatory approvals for new or modified products, if granted, may
include significant limitations on the indicated uses for which a product is
marketed. In addition, the extent of potentially adverse governmental
regulations that might arise from future legislative, administrative or judicial
action cannot be determined. The final approval granted by the FDA for marketing
the Reliance Insert in the United States was conditioned upon final labeling
review, which has been completed, and an undertaking to complete a five-year
post-marketing study covering 150 patients designed to determine (i) the degree
of urinary tract infection associated with use of the device, including type and
frequency of symptomatic bacteriuria, and (ii) the long-term effect of use of
the device on urethral integrity. If the FDA were to believe that the Company is
not in compliance with applicable law and regulations, the FDA could take one or
more of the following actions: withdraw previously approved applications;
require notification to users regarding newly found, unreasonable risks; request
the repair, refund or replacement of faulty devices; request corrective
advertisements, formal recalls or temporary marketing suspension; refuse to
review or clear applications to market any of the Company's future products in
the United States or to allow the Company to enter into government supply
contracts; or institute legal proceedings to detain or seize products, enjoin
future violations or assess criminal penalties against the Company, its officers
or employees. Civil penalties for Food, Drug and Cosmetic Act violations may be
assessed by the FDA in lieu of or in addition to instituting legal action. Any
such action by the FDA could result in disruption of the Company's operations
for an indeterminate period of time. The Company's manufacturing facility in
Needham, Massachusetts, the operations conducted there, and any future
manufacturing facilities developed or acquired by the Company and any operations
conducted there are subject to on-going inspections by the FDA. The Company
registered the facility with the FDA in connection with its Pre-Market Approval
application for the Reliance Insert and FDA representatives inspected the
facility and operations prior to granting approval of such application. Although
the Company's facility passed inspection in connection with this approval, as a
registered manufacturing facility subject to Good Manufacturing Practices, this
facility is subject to future inspections no less frequently than once every two
years. Any revocation of the Company's approval for marketing either the
Reliance Insert or the Impress Softpatch, or any material product recall or loss
of certification of the Company's manufacturing facility, would have a material
adverse effect on the Company's business, financial condition and results of
operations. The Company is also subject to regulation under federal, state and
local regulations regarding maintenance of a licensed pharmacy, work place
safety, environmental protection and hazardous and controlled substance
controls, among others. The Company cannot predict the extent of government
regulations or impact


                                       20
<PAGE>

of new government regulations which might have an adverse effect on the
production and marketing of the Company's products.

Risk of Inadequate Funding; Future Capital Funding

The Company plans to continue to expend substantial funds on marketing, research
and product development, seeking out partnerships that fit into its strategic
platforms and pursuit of regulatory approvals.

There can be no assurance that the Company's existing capital resources and
any funds generated from future operations will be sufficient to finance any
required investment or pay interest on and principal of the notes or that
other sources of funding will be available. In addition, future sales of
substantial amounts of the Company's securities in the public market could
adversely affect prevailing market prices and could impair the Company's
future ability to raise capital through the sale of its securities.

Uncertainty Regarding Patents and Protection of Proprietary Technology

The Company's ability to compete effectively will depend, in part, on its
ability to develop and maintain proprietary aspects of its technology. There can
be no assurance as to the validity of the United States patents held by the
Company with respect to all of its products, or as to the degree of protection
offered by these patents. There can be no assurance that the Company's patents
will not be challenged, invalidated or circumvented in the future. In addition,
there can be no assurance that competitors, many of which have substantial
resources and have made substantial investments in competing technologies, will
not seek to apply for and obtain patents that will prevent, limit or interfere
with the Company's ability to make, use and sell its products either inside or
outside the United States. The defense and prosecution of patent litigation or
other legal or administrative proceedings related to patents is both costly and
time-consuming, even if the outcome is favorable to the Company. During the
pendency of any such proceedings, the Company may be restrained, enjoined or
otherwise limited in its ability to make, use or sell a product incorporating
the patents or technology that are the subject of such claim, which would have a
material adverse effect on the Company's business, financial condition and
results of operations. An adverse outcome in any such proceeding could subject
the Company to significant liabilities to third parties, require disputed rights
to be licensed from others or require the Company to cease making, using or
selling any products. There can be no assurance that any licenses required under
any patents or proprietary rights would be made available on terms acceptable to
the Company, if at all.

The Company also relies on unpatented proprietary technology and there can be no
assurance that others may not independently develop the same or similar
technology or otherwise obtain access to the Company's unpatented proprietary
technology. In addition, the Company cannot be certain that others will not
independently develop substantially equivalent or superseding proprietary
technology, or that an equivalent product will not be marketed in competition
with the Company's products, thereby substantially reducing the value of the
Company's proprietary rights. There can be no assurance that any confidentiality
agreements between the Company and its employees or consultants will provide
meaningful protection for the Company's trade secrets, know-how or other
proprietary information in the event of any unauthorized use or disclosure of
such trade secrets, know-how or other proprietary information. Finally, there
can be no assurance that the Company's trademarks chosen and registered will
provide meaningful protection.

Product Liability Risk; Limited Insurance Coverage

The manufacture and sale of medical products and the conduct of clinical
trials using new technology entail the risk of product liability claims.
There can be no assurance that the Company's existing insurance coverage
limits are adequate to protect the Company from any liabilities which it
might incur in connection with the clinical trials for any of its products
or, the commercialization of any of its products. Such insurance is expensive
and in the future may not be available on acceptable terms,

                                       21
<PAGE>

if at all. A successful product liability claim or series of product liability
claims brought against the Company in excess of its insurance coverage would
have a material adverse effect on the Company's business, financial condition
and results of operations. In addition, any claims, even if not ultimately
successful, could adversely affect the market acceptance of the Company's
products.

Dependence on Key Personnel

The Company is dependent upon a number of key scientific and management
personnel (most of whom do not have employment agreements providing for a fixed
term of employment). The loss of the services of one or more key individuals
would have a material adverse effect on the Company's business, financial
condition and results of operations. The Company's success will also depend on
its ability to attract and retain other highly qualified scientific and
management personnel. The Company faces competition for such personnel and there
can be no assurance that the Company will be able to attract or retain such
personnel. See "Executive Officers of the Registrant."

Uncertainty Relating to Third-Party Reimbursement

In the United States, third-party reimbursement is currently generally available
for surgical procedures for incontinence, but generally unavailable for
patient-managed products such as diapers and pads. As part of its near-term
marketing plan in the United States, the Company does not believe it will obtain
government or private insurance reimbursement for its Reliance Insert or Impress
Softpatch and that the prospect of substantial third-party reimbursement for
either device in the United States may be difficult. In Europe, the Company and
its European distributors have agreed to adopt a strategy of pursuing
reimbursement for the use of the Reliance Insert in each of their respective
territories where it is appropriate. The availability of third-party
reimbursement for the Reliance Insert in Europe varies from country to country.
While the Company has received notice that full reimbursement for the use of the
Reliance Insert will be provided by the relevant German, Swedish and Norwegian
governmental authorities and by certain authorities covering much of Denmark and
Finland, it is unclear whether reimbursement will be available for the Reliance
Insert in the remainder of Denmark or Finland, or whether reimbursement will be
available for the Reliance Insert in France, The Netherlands or the United
Kingdom. It is also unclear whether or not such reimbursement approvals that the
Company has received may at some point in the future be reversed. The Company
has not yet established a strategy with respect to seeking reimbursement for the
Impress Softpatch outside of the United States. If third-party reimbursement is
unavailable in the relevant European country or in the United States, consumers
will have to pay for the Reliance Insert or Impress Softpatch themselves,
resulting in greater relative out-of-pocket cost of such therapies as compared
to surgical procedures and other management options for which third-party
reimbursement is available. Changes in the availability of third-party
reimbursement for the Reliance Insert or Impress Softpatch, for products of the
Company's competitors or for surgical procedures may affect the pricing of the
Company's products or the relative cost to the consumer. The Company is not able
to predict the effect that the availability or unavailability of third-party
reimbursement for the Reliance Insert or Impress Softpatch may have on the
commercialization of such products abroad or in the United States. See
"Business--Third-Party Reimbursement."

Volatility of Market Prices

The market price of the Common Stock and Notes may be highly volatile. Factors
such as quarter-to-quarter variations in the Company's operations or financial
performance and announcements of technological innovations or new products,
results of clinical trials or other regulatory or reimbursement events by the
Company or its competitors or any of its or their regulators could cause the
market price of the Common Stock or Notes to fluctuate significantly. In
addition, in recent years the stock markets in general, and the market prices
for medical technology companies in particular, have experienced significant
volatility, which often may have been unrelated to the operating performance of
the affected companies. Such volatility may adversely affect the market price of
the


                                       22
<PAGE>

Common Stock or Notes. See "Market for Registrant's Common Stock and Related
Shareholder Matters."

Certain Charter and By-Law Provisions May Affect Market Prices

The Company's Restated Articles of Organization and the Company's Amended and
Restated By-Laws contain provisions that may have the effect of making it more
difficult for a third party to acquire control of, or of discouraging
acquisition bids for, the Company. This could limit the price that certain
investors might be willing to pay in the future for shares of Common Stock.

Certain Massachusetts Laws May Affect Market Prices

Certain Massachusetts laws contain provisions that may have the effect of making
it more difficult for a third party to acquire control of, or of discouraging
acquisition bids for, the Company. These laws include Chapter 110F of the
Massachusetts General Laws, which prohibits certain "business combinations" with
"interested stockholders," and Chapter 110D, entitled "Regulation of Control
Share Acquisitions." These provisions could limit the price that certain
investors might be willing to pay in the future for shares of Common Stock.

Effect of Issuance of Preferred Stock

Shares of preferred stock may be issued in the future without further
stockholder approval and upon such terms and conditions, and having such rights,
privileges and preferences, as the Board of Directors may determine. The rights
of the holders of Common Stock will be subject to, and may be adversely affected
by, the rights of the holders of any preferred stock that may be issued in the
future. In addition, the issuance of preferred stock could have the effect of
making it more difficult for a third party to acquire control of, or of
discouraging acquisition bids for, the Company. This could limit the price that
certain investors might be willing to pay in the future for shares of Common
Stock.

Concentration of Ownership

As of December 31, 1997, directors and executive officers of the Company and
their affiliates owned approximately 19% of the outstanding Common Stock
(including options to purchase Common Stock exercisable within 60 days of such
date). As a result, such persons have the ability to assert significant
influence over the Company and the direction of its affairs and business. See
"Security Ownership of Certain Beneficial Owners and Management."

Absence of Dividends

The Company has not paid cash dividends and does not anticipate doing so for the
foreseeable future.

Shares Available for Future Sale

The future sale of shares of the Company's Common Stock could have an adverse
effect on the market price of the Common Stock or the Notes. The Company
currently has two effective registration statements on file with the Securities
and Exchange Commission initially covering the resale of up to an aggregate of
8,519,538 shares of Common Stock held by certain current shareholders of the
Company. Of these 8,519,538 shares, 6,184,512 shares are covered by a
registration statement which was declared effective in October 1995 registering
shares of Common Stock held by approximately 73 holders. These shares,
representing shares of Common Stock issued upon the conversion of the Company's
previously outstanding convertible preferred stock, were registered at the
request of the holders of such shares. All of these shares, with the exception
of 1,641,257 shares held


                                       23
<PAGE>

by an affiliate of the Company, may be sold currently under Rule 144(k) under
the Securities Act without regard to volume or other limitations. The remaining
2,335,026 shares, which were issued to the former shareholders of Advanced
Surgical Intervention, Inc. in connection with the acquisition of the Impress
Softpatch technology in May 1996, are covered by a registration statement which
was declared effective in June 1996. These shares are held by 273 holders, with
the largest number of shares held by any single holder thereunder being
approximately 252,000 shares. The Company believes that many of the shares
covered by these registration statements have been sold in the open market prior
to the date hereof. All of the shares covered by these registration statements
are freely tradeable in the open market without volume limitations. As of
December 31, 1997 the Company also has options outstanding to purchase an
aggregate of 1,722,538 shares of Common Stock and has an additional 404,249
shares of Common Stock reserved for issuance of options which may be granted and
exercised under the Company's existing employee benefit plans. Any shares of
Common Stock issued upon the exercise of such outstanding options or any options
granted in the future will be, upon issuance, freely tradeable on the open
market, subject in some cases to the volume limitations imposed by Rule 144
under the Securities Act. As of December 31, 1997, the Company had reserved
5,195,391 shares of Common Stock for issuance upon conversion of the Notes.


                                       24
<PAGE>

Item 2.  Properties

The Company currently leases space in four facilities. Three facilities are
located in Massachusetts; in Needham, Hopkinton and Norwood, and the fourth
facility is located in Nashua, New Hamphsire.

The Company occupies a 40,000 square-foot leased facility in Needham,
Massachusetts. This lease expires in 2001; however, the Company has the option
to extend the lease for an additional five years. This leased facility includes
research, manufacturing and administrative space. The FDA regulates companies
that manufacture commercial medical devices and requires that such companies
manufacture such devices in a properly designed environment. The Company
registered the facility with the FDA in connection with its PMA application for
the Reliance Insert and FDA representatives inspected the facility and
operations prior to granting approval of such application. Although the
Company's facility passed inspection in connection with this approval, as a
registered manufacturing facility subject to Quality System Regulation, this
facility is subject to future inspection no less frequently than once every two
years.

The Company also leases additional space in Hopkinton and Norwood. The Hopkinton
lease is for a 13,000 square foot area occupied by the Assurance Medical Group.
This lease commenced in 1997 and has a five-year term. The Norwood lease
commenced in 1997 has a five-year term and was for a 9,000 square foot area
which was intended to be occupied by additional research and administrative
staff of the CaverMap Surgical Aid product line. As part of the first quarter of
1998 restructuring plan, the CaverMap Surgical Aid research and administrative
staff will occupy the excess office space created in the Needham facility. The
Company plans to sublet this Norwood space for the remainder of the lease term.

The Company leases a 9,200 square foot fulfillment center in Nashua, New
Hampshire, where the Company's staff pharmacist was located. This lease expires
in 1998. As part of the restructuring in th first quarter of 1998, the Company
moved its continence care consumer product fulfillment and distribution from
Nashua to the Needham facility. The Company has decided not to renew the Nashua
lease.

Item 3.  Legal Proceedings

The Company is not involved in any material legal proceedings, nor is the
property of the Company the subject of any such proceedings.

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

During the fourth quarter of the Company's 1997 fiscal year, there were no
matters submitted to a vote of the security holders of the Company.


                                       25
<PAGE>

Item 5. Market for Registrant's Common Stock and Related Shareholder Matters

UroMed's common stock is traded on the Nasdaq National Market under the symbol
URMD. As of December 31, 1997 there were 518 registered holders of the Company's
common stock. The Company has not paid dividends on its common stock since
inception and does not anticipate paying any cash dividends in the foreseeable
future. The following table set forth for the periods indicated are the range
of high and low sales prices of the Company's Common Stock as reported by
Nasdaq.

<TABLE>
<CAPTION>

Year Ended December 31, 1997                           High         Low
--------------------------------------------------------------------------------
<S>                                                   <C>         <C>

First Quarter                                         $ 9   3/4   $ 6  3/8
Second Quarter                                          7   7/8     2  3/8
Third Quarter                                           6   7/8     2  7/8
Fourth Quarter                                          8   1/2     3  1/2

Year Ended December 31, 1996                           High         Low
--------------------------------------------------------------------------------
First Quarter                                        $ 16   1/2   $ 9  1/4
Second Quarter                                         14   1/2     8  3/4
Third Quarter                                          14   5/8     9  1/4
Fourth Quarter                                         12   1/4     8  3/4

</TABLE>


                                       26
<PAGE>


Item 6.  Selected Financial Data

                                                         Selected Financial Data

<TABLE>
<CAPTION>
Year Ended December 31,                                            1997         1996            1995         1994         1993
------------------------------------------------------------------------------------------------------------------------------
(in thousands, except per share amounts)
<S>                                                           <C>          <C>             <C>          <C>          <C>
Statement of Operations Data:
Revenues                                                      $     503    $   2,622       $   1,052    $      --    $      --
                                                              ----------------------------------------------------------------
Cost and expenses:
   Cost of revenues                                               4,722        5,110           2,564           --           --
   Research and development                                      11,692       37,597(1)        6,821        5,796        2,753
   Marketing and sales                                           13,233        7,276           2,169        1,417          504
   General and administrative                                     5,514        2,816           1,898        2,007          719
                                                              ----------------------------------------------------------------
     Total costs and expenses                                    35,161       52,799          13,452        9,220        3,976
                                                              ----------------------------------------------------------------
Loss from operations                                            (34,658)     (50,177)        (12,400)      (9,220)      (3,976)

Interest income, net                                                 25        2,517           2,688        1,610          268
                                                              ----------------------------------------------------------------

Net loss                                                        (34,633)     (47,660)         (9,712)      (7,610)      (3,708)

Excess of redemption price over carrying
   costs of Series A redeemable convertible preferred stock          --           --              --         (383)          --
                                                              ----------------------------------------------------------------

Net loss attributable to common stockholders                  $ (34,633)   $ (47,660)      $  (9,712)   $  (7,993)   $  (3,708)
                                                              ================================================================

Basic and diluted net loss per share (2)                      $   (1.30)   $   (1.87)      $    (.46)   $    (.46)   $    (.70)
                                                              ================================================================

Basic and diluted weighted average common
   shares outstanding                                            26,578       25,544          21,262       17,520        5,296
                                                              ================================================================


Year Ended December 31,                                            1997         1996            1995         1994         1993
------------------------------------------------------------------------------------------------------------------------------
Balance Sheet Data:
   Cash, cash equivalents and short-term investments          $  65,025    $ 101,638       $  60,427    $  45,704    $  17,980
   Working capital                                               60,907       98,013          57,681       44,288       17,697
   Total assets                                                  76,593      110,488          64,264       47,818       18,314
   Long-term debt and capital lease obligations                  69,000       69,000              --           12           43
   Accumulated deficit                                         (105,927)     (71,294)        (23,634)     (13,922)      (5,929)
   Total stockholders' equity                                     1,785       35,952          60,092       45,660       17,874
</TABLE>

(1)   Includes $30.2 million for the acquisition of the Impress Softpatch
      technology and related expenses. See Note 3 to the Financial Statements.

(2)   All net loss per share amounts have been restated to reflect the
      provisions of Statement of Financial Accounting Standards No. 128,
      "Earnings Per Share," and with respect to 1993, the provisions of
      Securities and Exchange Commission Staff Accounting Bulletin No. 98.

                                       27


<PAGE>

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


Overview

The Company is a developer of male and female healthcare products. The Company
has developed or acquired technology in three core areas: prostate cancer,
urinary incontinence, and breast cancer. The Company's direct hospital-based
business lines include its CaverMap(TM) Surgical Aid, intended to aid physicians
in preserving vital nerves during prostate cancer surgery, and its BEACON
Technology System(TM) a minimally invasive incontinence surgical line. The
Company's office-based continuum of continence care product lines include the
Impress(TM) Softpatch, the INTROL(R) Bladder Neck Support Prosthesis, and the
Reliance(R) Insert. In breast cancer screening, the Company is developing its
investigational BreastExam,(TM) BreastCheck(TM) and BreastView(TM) electronic
palpation technology in order to aid physicians and patients in the important
mission of finding suspicious breast lumps earlier. The Company also continues
to dedicate significant resources to the development and/or acquisition of
product lines that fit into its strategic platform.

     In the first quarter of 1998, the Company restructured its operations to
increase its emphasis on hospital-based sales efforts and to decrease its
investment in the consumer-oriented continence care business, which the Company
believes will be best approached through utilizing marketing partners. The
restructuring involves the reduction company-wide of approximately 40 employees.
This initiative is designed to reduce operating costs while allowing UroMed to
create a business model with a significantly lower break-even level. The Company
expects to take a charge for the restructuring of approximately $1.0 million in
the first quarter of 1998. The projected cost savings of the restructuring, and
related actions, are expected to be approximately $11.0 million per year.
However, there can be no assurance that these cost savings will be realized.

Hospital-Based Business

The Company intends to increase its direct focus in this area and the Company
believes that its restructuring will enable it to apply additional resources to
prostate cancer and incontinence surgical market opportunities. Based on
favorable market research and customer feedback, the Company believes an
opportunity exists to build a prostate cancer business that complements its
therapeutic efforts in urinary incontinence.

Prostate Cancer

The CaverMap Surgical Aid is a device for physicians to help potentially improve
prostate cancer surgery outcomes by reducing complications. This device provides
the surgeon greater capability to locate and map the cavernosal nerve filaments,
thereby enabling the surgeon to make the best possible decision concerning
tissue extraction in order to best remove the cancer while sparing nerves vital
for potency and other functions. The Company's patented technology for this
system uses state-of-the-art electronics to locate the microscopic cavernosal
nerves that control erectile function. The CaverMap Surgical Aid was cleared by
the U.S. Food and Drug Administration ("FDA") for marketing in the United States
in November 1997. The Company is focusing on U.S. initial introduction efforts
of this product in mid-1998.

Incontinence Surgery

On August 7, 1997, the Company entered into an exclusive license and supply
agreement with Medworks Corporation of Louisville, KY to market, sell and
distribute Medworks' technology as part of the Company's BEACON line of surgical
kits to correct female urinary stress incontinence. This BEACON Technology is
FDA-cleared and is used by surgeons as components of surgical kits designed to
make the procedure simpler and more consistent. The kits currently include
templates, suture retrievers, suture cutters and bone anchors. The Company
expects to commence full-scale marketing and sales launches of a series of
surgical kits utilizing its BEACON Technology in 1998.

Urinary Incontinence Consumer-Oriented Products

The Impress Softpatch was cleared by the FDA for marketing in the United States
in May 1996. The Impress Softpatch is a small, prescription, disposable adhesive
patch designed to be placed externally against the urinary opening to block the
leakage of urine in mild-to-moderate urinary incontinent patients. The Company
has since developed a commercial manufacturing process for the Impress Softpatch
and has taken delivery of the related automated manufacturing equipment. This
equipment is scheduled for operational qualification during the first quarter of
1998. During the second half of 1997, the Company conducted initial consumer
tests and market analysis for the Impress Softpatch. Based on the results of
such tests, the Company

                                       28


<PAGE>

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

has decided to pursue the potential over-the-counter ("OTC") market for Impress,
in addition to the prescription ("Rx") market. UroMed's application for the OTC
market for Impress is currently under review by the FDA. There can be no
assurance that OTC approval by the FDA will be obtained. The Company believes
that the best vehicle for capitalizing on both the OTC and Rx marketplaces is in
partnership or partnerships with larger established companies. Therefore, UroMed
is currently pursuing partnership(s), and has decided not to incur Impress
launch costs until such partnership(s) are in place.

     On April 9, 1997, the Company acquired the product line, all associated
license rights and all other rights of Johnson & Johnson Medical, Inc. and
certain of its affiliates to the INTROL Bladder Neck Support Prosthesis. The
INTROL Bladder Neck Support Prosthesis, cleared for prescription marketing in
the U.S. by the FDA in May of 1995, is a patented intravaginal device which is
designed to elevate the bladder neck to its normal anatomical position,
simulating the effect of bladder neck suspension surgery. The Company initially
serviced the small group of physicians who had been trained and were involved in
the limited post-FDA clearance marketing of INTROL. The Company initiated a
broader United States launch of INTROL to healthcare practitioners in July 1997.
In the short term, the Company expects a minimal financial contribution from
INTROL in 1998.

     The Reliance Insert was cleared by the FDA for marketing in the United
States in August 1996. The Reliance Insert is a small, prescription,
balloon-tipped, single-use plug designed to be inserted in the urethra and
inflated to block the flow of urine from the bladder to the urethra. The Company
completed its manufacturing and marketing scale-up and commercially launched the
Reliance Insert in the United States beginning in November 1996. The Company
does not expect to actively market the Reliance Insert directly in the near
future and expects a minimal financial contribution from Reliance in 1998.

     During 1997, several major health plans approved patient reimbursement for
UroMed's line of office-based continence care products, including the Reliance
Insert, the Impress Softpatch and the INTROL Bladder Neck Support Prosthesis.

Breast Cancer

UroMed's Assurance Medical Division is developing electronic palpation
technology for its BreastCheck, BreastExam and BreastView devices. The
BreastCheck device is designed to assist women with their monthly breast exams
by potentially improving sensitivity for suspicious breast lumps and providing a
greater level of confidence with self examination. It is a simple-to-operate,
hand-held device that utilizes advanced electronics and miniature pressure
sensors that are glided over the breast, gently "palpating" the breast in a
manner similar to palpation using the human hand. The BreastExam and BreastView
devices are similar in design to the BreastCheck device, however they are
designed for physician use. These products will be used by physicians as an
adjunct to a clinical breast exam, potentially resulting in a more sensitive and
objective breast exam.

     The BreastCheck technology is an investigational technology and must
receive FDA approval. It is probable that this will be in the form of Pre-Market
Approval ("PMA"). The Company has agreed to a clinical protocol with the FDA and
is continuing its piloting of studies for performance of the technology for
professional as well as consumer use. The final clinical trials are currently
slated to begin in 1998, and this technology may be available in the U.S. as
early as 1999, if and only if, FDA approval is obtained within that time frame.
No assurances can be made that the Company will be successful in obtaining FDA
approval for this product, or as to the timing of such approval.

Results of Operations
Years Ended December 31, 1997 and 1996

Revenues

The Company's revenues decreased by 81% to $0.5 million from $2.6 million for
the year ended 1997 compared to the year ended 1996. The decrease is primarily
due to the fact that there were no stocking shipments of the Reliance Insert
product to the Company's European distributors during 1997 and that there were
decreases in recognition of deferred revenue from a portion of the advance
payments received upon the signing of European distribution agreements,
partially offset by small amounts of U.S. sales of the Reliance Insert, the
INTROL Bladder Neck Support Prosthesis and the Impress Softpatch.


                                       29

<PAGE>

     Sales of the Reliance Insert in the U.S. in 1997 were minimal due to a more
modest than expected ramp-up of prescriptions by U.S. urologists and the
difficulties faced by the Company in persuading physicians and patients to
accept a urethral insert such as Reliance as a viable alternative to other
competing treatments for UI as well as the resources that would be needed to
attempt to overcome these obstacles. The Company is not actively marketing the
Reliance Insert and expects minimal sales for 1998.

Cost of Revenues

Cost of revenues decreased by 8% to $4.7 million from $5.1 million for the year
ended 1997 as compared to the year ended 1996. The decrease is due to
significantly lower variable product cost due to lower product sales in 1997 as
compared to 1996, partially offset by the same level of manufacturing-related
overhead costs in 1997 as in 1996 and charges in 1997 for the impairment of
certain Reliance manufacturing equipment. Cost of revenues significantly
exceeded product revenue in 1996 and in 1997 due to the current level of
variable product costs as well as the Company's manufacturing-related overhead
costs relative to the low start-up volume of production in these periods. The
Company expects negative or low gross margins for the near term and,
accordingly, has considered this in its valuation of inventory. There can be no
assurance that the Company will ever realize sufficient production volumes or
otherwise reduce its manufacturing costs in order to raise gross margins.

     The Company's first quarter 1998 restructuring will result in a strategic
shift away from the consumer-oriented continence care business and increased
investment in hospital-based products such as the CaverMap Surgical Aid and
BEACON surgical kits. As a result, the Company expects a decrease in cost of
revenues over the first two quarters of 1998 with specific reductions expected
to occur in direct labor and manufacturing engineering expenses.

Research and Development

Research and development expenses decreased by 69% to $11.7 million from $37.6
million for the year ended 1997 as compared to the year ended 1996. The decrease
is primarily due to the 1996 acquisition of technology for the Impress Softpatch
(see Note 3 of Notes to the Financial Statements). This was accounted for as
purchased in-process research and development and, as a result, the purchase
price of $30.0 million and related expenses of $0.2 million were charged to
operations in 1996. Without the Impress Softpatch acquisition charge, research
and development expenses increased by 58% to $11.7 million for the year ended
1997 as compared to $7.4 million for the year ended 1996.

     The increase in research and development costs for the year ended 1997
compared to the year ended 1996, without this Impress Softpatch acquisition
charge, was primarily due to increased expenditures on the Impress Softpatch
scale-up activities, specific charges in relation to product-line acquisition
activity, charges for the impairment of certain Reliance manufacturing equipment
and the additional efforts and resources on internal development activities and
in-licensing activities, including the BreastCheck breast self-examination
device, the physician-use BreastExam, and BreastView devices, and the CaverMap
Surgical Aid.

     The Company anticipates decreasing expenditures in research and development
over the first two quarters of 1998 due to the result of the restructuring
activities to take place in the first quarter of 1998 and decreasing
expenditures in relation to the Impress Softpatch scale-up.

Marketing and Sales

Marketing and sales expenses increased by 82% to $13.2 million from $7.3 million
for the year ended 1997 as compared to the year ended 1996. This increase was
the result of expenditures incurred in connection with the U.S. launch of the
Reliance Insert, which began in November 1996 and continued throughout most of
1997. Increases were also a result of the commencement of test marketing
activities and market analysis for the Impress Softpatch. Increases relate
specifically to costs for marketing and sales personnel, costs to design and
conduct advertising and public relations campaigns, sales training and costs in
conjunction with marketing activities in the prostate cancer and breast cancer
detection areas. The Company anticipates decreasing sales and marketing
expenditures for the first two quarters of 1998 as a result of the first quarter
1998 restructuring and a decreased level of Impress Softpatch test advertising
and market research activities.


                                       30

<PAGE>

Management's Discussion and Analysis of Financial Condition and
Results of Operations


General and Administrative

General and administrative expenses increased by 96% to $5.5 million from $2.8
million for the year ended 1997 as compared to the year ended 1996. These
increases are primarily due to costs to support the U.S. launch of the Reliance
Insert, costs in connection with supporting the internal development activities
in the prostate cancer and breast cancer detection areas and increased
consulting expenses. General and administrative expenses are expected to
decrease over the first two quarters of 1998 as a result of the first quarter of
1998 restructuring actions and reduced consulting and systems expenses in
relation to consumer-based products.

Interest Income and Interest Expense

Interest income increased by 32% to $4.6 million from $3.5 million for the year
ended 1997 as compared to the year ended 1996. The increase was attributable to
the significant increase in the Company's interest-bearing cash and cash
equivalents and short-term investments as a result of the issuance of the
Company's 6% Convertible Subordinated Notes due October 15, 2003 (the
"Convertible Notes") in October 1996 and higher realized interest rates on
invested cash balances in 1997.

     Interest expense increased significantly to $4.5 million from $0.9 million
for the year ended 1997 as compared to the year ended 1996 as a result of the
full year of interest in 1997 for the Convertible Notes issued in October 1996.

Results of Operations
Years Ended December 31, 1996 and 1995

Revenues

The Company had revenues of $2.6 million in 1996 compared to $1.1 million in
1995, an increase of $1.5 million or 136%. Revenues in 1996 consisted primarily
of initial stocking shipments of the Reliance Insert product to the Company's
three European distributors and related recognition of deferred revenue from a
portion of the advance payments received upon the signing of European
distribution agreements.

     Revenue in 1995 was the result of initial stocking shipments, beginning in
August 1995, of the Reliance Insert to the Company's European distributors,
primarily for the German launch.

Cost of Revenues

Cost of revenues were $5.1 million for 1996 compared to $2.6 million for 1995,
an increase of $2.5 million, or 96%, over 1995. These costs significantly
exceeded product revenue for the periods due to the current level of variable
product costs as well as the Company's manufacturing-related overhead costs,
relative to the low start-up volume of production in the periods.

Research and Development

Research and development expenses increased by $30.8 million, or 453%, to $37.6
million in 1996 as compared to $6.8 million in 1995. The increase was primarily
the result of the acquisition of the Impress Miniguard and related technology in
May 1996 (see Note 3 of Notes to Financial Statements) which was accounted for
as purchased in-process research and development and, as a result, the purchase
price of $30.0 million and related expenses of $0.2 million was expensed as
research and development in 1996. Before this charge, research and development
expenses increased by $0.6 million, or 9%, to $7.4 million in 1996 as compared
to $6.8 million in 1995. The increase in research and development costs was
primarily due to additional engineering personnel and research projects, outside
consulting services and increased clinical study costs. Partially offsetting
this increase, manufacturing spending relating to the Reliance Insert, starting
in the third quarter of 1995, was included in cost of revenues due to the
Company's transition from the development stage to the commencement of
commercial product manufacturing.

Marketing and Sales

Marketing and sales expenses increased by $5.1 million, or 232%, to $7.3 million
in 1996 as compared to $2.2 million in 1995. This increase was the result of
expenditures incurred in connection with the U.S. launch of the Reliance Insert
including hiring marketing and sales personnel, preparations for an advertising
campaign, marketing consulting fees, public relations activities, sales
training, exhibit costs and market research.


                                       31

<PAGE>

General and Administrative

General and administrative expenses increased $0.9 million, or 48%, to $2.8
million in 1996 as compared to $1.9 million in 1995. The increase was
attributable to hiring additional administrative personnel, and increased
systems, consulting and legal expenses.

Interest Income and Interest Expense

Interest income increased by $0.8 million, or 30%, to $3.5 million in 1996 as
compared to $2.7 million in 1995. The increase was attributable to significantly
higher interest bearing cash and cash equivalents and short-term investments
during 1996 as a result of the completion of a public offering of the Company's
common stock in the fourth quarter of 1995 and the issuance of the Company's
Convertible Notes in the fourth quarter of 1996, partially offset by lower
interest rates on investments in 1996.

     Interest expense increased from $0.0 million in 1995 to $0.9 million in
1996 as a result of the issuance of the Convertible Notes in October 1996.

Liquidity and Capital Resources

At December 31, 1997, the Company had cash, cash equivalents and short-term
investments totaling $65.0 million, a decrease of $36.6 million, or 36%, from
$101.6 million at December 31, 1996. At December 31, 1997, the Company's funds
were invested in U.S. government obligations, corporate debt obligations and
money market funds.

     Net cash used in operating activities of $30.5 million for the year ended
December 31, 1997 was primarily a result of the net loss for the period, which
was partially offset by non-cash expenses and a net decrease in the components
of working capital.

     Net cash provided by investing activities was $3.3 million for the year
ended December 31, 1997. Short-term investments decreased by $3.2 million due to
a shift into investments with shorter maturities. In addition, the Company
invested $1.0 million in the preferred stock of Medworks Corporation in
connection with a license and supply agreement. Fixed assets increased by $5.5
million as a result of purchases of additional automated assembly and packaging
equipment, computer equipment and leasehold improvements.

     Net cash provided by financing activities was $0.3 million for the year
ended December 31, 1997 as a result of proceeds received from the exercise of
the Company's stock options and from purchases under the employee stock purchase
plan.

     In October 1996, the Company sold $69.0 million of its Convertible Notes.
These Convertible Notes are convertible at any time into shares of common stock
of the Company at a conversion price of $13.281 per share, subject to adjustment
under certain circumstances. Interest on the Convertible Notes is payable each
April and October, unless previously converted or repurchased. There were no
such conversions or repurchases during 1997. Interest payments of $4.1 million
were made in relation to the Convertible Notes in 1997. The Convertible Notes
are redeemable at the option of the Company on or after October 1999 at
specified redemption prices, ranging from 100.857% to 103.429% of the principal
amount plus accrued and unpaid interest at the redemption date.

     The Company believes that available cash, cash equivalents and short-term
investments will be sufficient to meet the Company's operating expenses and
capital requirements for the foreseeable future. The Company's future long-term
liquidity and capital requirements depend on numerous factors, including, but
not limited to: development of the Company's marketing capability, market
acceptance of the BEACON Technology System surgical line and the CaverMap
Surgical Aid, development of the Company's Impress Softpatch partnership(s); the
development status of other potential products, including, but not limited to:
the BreastCheck, the BreastExam and the BreastView devices, potential
acquisitions and other potential strategic product opportunities. There can be
no assurance that the Company will not require additional financing or that, if
required, such financing will be available on terms acceptable to the Company.

     The Company has begun the process of evaluating its computer software and
databases to ensure that any modifications required to be year 2000 compliant
are made in a timely manner. Thus far, management has determined the financial
impact of such modifications to be immaterial to Company's financial position or
results of operations in any given year.


                                       32

<PAGE>

Forward-Looking Statements and Associated Risks

Certain statements contained in this Annual Report may be considered
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including
statements regarding (i) the planned progression of the Company's
commercialization strategies for the Impress Softpatch, the INTROL Bladder Neck
Support Prosthesis and the BEACON Technology System surgical line, including the
timing and extent of initial or other sales, (ii) consumer acceptance of the use
of the Impress Softpatch and the INTROL Bladder Neck Support Prosthesis as
strategies for the self-care of urinary incontinence and the size and
accessibility of the Company's target markets, (iii) the Company's expectations
regarding its research and development and in-licensing activities, including
but not limited to the BreastCheck, BreastExam and BreastView devices, (iv) the
timing related to the commencement of marketing activities for the commercial
launches of the BreastCheck, BreastExam and BreastView devices, Impress
Softpatch, BEACON Technology System, and the CaverMap Surgical Aid, (v) the
timing related to regulatory clearance for the BreastCheck and BreastExam
devices, (vi) the Company's planned uses for its cash and other liquid
resources, (vii) the Company's expectations regarding its planned 1998
restructuring and (viii) the extent of future revenues, expenses and results of
operations and the sufficiency of the Company's financial resources to meet
planned operational costs and other expenditure needs. These forward-looking
statements are based largely on the Company's expectations and are subject to a
number of risks and uncertainties, many of which are beyond the Company's
control. Actual results could differ materially from these forward-looking
statements as a result of certain factors, including those described below:

-     The uncertainty that the Impress Softpatch, the INTROL Bladder Neck
      Support Prosthesis, the BEACON Technology system and the CaverMap
      Surgical Aid will gain market acceptance either among physicians or
      urinary incontinence sufferers in the United States.

-     The uncertainty that physicians will prescribe the Impress Softpatch and
      the INTROL Bladder Neck Support Prostheses in significant numbers.

-     The uncertainty that the Company will be able to develop an effective
      sales force and implement a successful marketing campaign for the BEACON
      Technology system and the CaverMap Surgical Aid in the United States.

-     The uncertainty that the Company will be able to develop effective
      partnerships to pursue over-the-counter and prescription outlets for the
      Impress Softpatch.

-     The uncertainty of receiving regulatory clearance for the Company's
      BreastCheck, BreastExam and BreastView devices and OTC approval for the
      Impress Softpatch.

-     The Company's dependence on others for raw materials and certain
      components of its products, including certain materials available only
      from single sources.

-     The uncertain protection afforded the Company by its patents and/or other
      intellectual property rights relating to the the Impress Softpatch, the
      INTROL Bladder Neck Support Prosthesis and other products.

-     The uncertainty as to whether the Company will be able to manufacture,
      market and sell its products at prices that permit it to achieve
      satisfactory margins in the production and marketing of its products.

-     Risks relating to FDA or other governmental oversight of the Company's
      operations, including the possibility that the FDA could impose costly
      additional labeling requirements on, or restrict the marketing of, the
      Company's products, or suspend operations at one or more of the Company's
      facilities.

-     The uncertainty of the size of the potential markets based on such
      technology and the coordination of products based on such technology with
      UroMed's other products of the BreastCheck, BreastExam, BreastView and the
      CaverMap Surgical Aid.

     Other relevant risks are described in the Business Section on Form 10-K
for the year ended December 31, 1997 under the headings "Forward-Looking
Statements and Associated Risks" and "Risk Factors" are incorporated herein by
reference.


                                       33


<PAGE>

Item 8.  Financial Statements and Supplementary Data

Index to the Financial Statements

<TABLE>
                                                                              Page
                                                                             ------
     <S>                                                                     <C>
     Report of Independent Accountants....................................     35
     Balance Sheet at December 31, 1997 and 1996..........................     36
     Statement of Operations for each of the three years
       in the period ended December 31, 1997..............................     37
     Statement of Stockholders' Equity for each of the
       three years in the period ended December 31, 1997..................     38
     Statement of Cash Flows for each of the three years
       in the period ended December 31, 1997..............................     39
     Notes to the Financial Statements....................................    40-46


     Financial Statement Schedule:
       II - Valuation and Qualifying Accounts and Reserves................     47

</TABLE>

All other financial statement schedules are omitted because they are not
applicable or the required information is shown in the financial statements
or footnotes thereto.

                                       34

<PAGE>

                                               Report of Independent Accountants

To the Board of Directors and Stockholders of UroMed Corporation

In our opinion, the financial statements listed in the accompanying index
present fairly, in all material respects, the financial position of UroMed
Corporation at December 31, 1997 and 1996, and the results of its operations
and its cash flows for each of the three years in the period ended December
31, 1997, in conformity with generally accepted accounting principles. These
financial statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based
on our audits. We conducted our audits of these statements in accordance with
generally accepted auditing standards which require that we plan and perform
the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the
financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.

/s/ Price Waterhouse LLP

Price Waterhouse LLP
Boston, Massachusetts
February 4, 1998

                                       35

<PAGE>

Balance Sheet

<TABLE>
<CAPTION>
December 31,                                                                          1997         1996
-------------------------------------------------------------------------------------------------------
(in thousands, except share data)
<S>                                                                              <C>          <C>
Assets
   Current assets:
     Cash and cash equivalents                                                   $  12,007    $  45,556
     Short-term investments                                                         53,018       56,082
     Inventories                                                                       287          587
     Prepaid expenses and other assets                                               1,403        1,324
                                                                                 ----------------------
       Total current assets                                                         66,715      103,549
   Fixed assets, net                                                                 6,357        3,962
   Other assets                                                                      3,521        2,977
                                                                                 ----------------------
                                                                                 $  76,593    $ 110,488
                                                                                 ======================

Liabilities and Stockholders' Equity
   Current Liabilities:
     Accounts payable                                                            $   1,197    $     713
     Accrued expenses                                                                4,378        4,216
     Deferred revenue                                                                  233          607
                                                                                 ----------------------
       Total current liabilities                                                     5,808        5,536
                                                                                 ----------------------

   Convertible subordinated notes                                                   69,000       69,000
                                                                                 ----------------------

   Commitments (Note 13)

   Stockholders' equity:
     Preferred stock, $.01 par value; 500,000 shares authorized; none issued -         --          --
     Common stock, no par value; 50,000,000 shares authorized; 26,703,963
       and 26,446,257 shares issued and outstanding at December 31, 1997 and
       1996, respectively                                                          106,993      106,739
     Additional paid-in capital                                                        653          753
     Net unrealized gain (loss) on investments available-for-sale                       66          (31)
     Deferred compensation                                                              --         (215)
     Accumulated deficit                                                          (105,927)     (71,294)
                                                                                 ----------------------
       Total stockholders' equity                                                    1,785       35,952
                                                                                 ----------------------
                                                                                 $  76,593    $ 110,488
                                                                                 ======================
</TABLE>

The accompanying notes are an integral part of the financial statements.

                                       36

<PAGE>
<TABLE>
<CAPTION>

                                                         Statement of Operations

Year Ended December 31,                          1997        1996        1995
-----------------------------------------------------------------------------
(in thousands, except per share data)
<S>                                          <C>        <C>         <C>
Revenues                                     $   503    $  2,622    $  1,052
                                             --------------------------------

Costs and expenses:
   Cost of revenues                             4,722       5,110       2,564
   Research and development                    11,692      37,597       6,821
   Marketing and sales                         13,233       7,276       2,169
   General and administrative                   5,514       2,816       1,898
                                             --------------------------------
     Total costs and expenses                  35,161      52,799      13,452
                                             --------------------------------
Loss from operations                          (34,658)    (50,177)    (12,400)

Interest income                                 4,558       3,462       2,692
Interest expense                               (4,533)       (945)         (4)
                                             --------------------------------

Net loss                                     $(34,633)   $(47,660)   $ (9,712)
                                             ================================

Basic and diluted net loss per share         $  (1.30)   $  (1.87)   $   (.46)
                                             ================================

Weighted average common shares outstanding     26,578      25,544      21,262
                                             ================================

The accompanying notes are an integral part of the financial statements.
</TABLE>

                                       37


<PAGE>

Statement of Stockholders' Equity

<TABLE>
<CAPTION>
                                                                                          Net
                                                                                   Unrealized
                                                                                   Gain (Loss)
                                                                                           on
                                                    Common Stock      Additional- Investments  Deferred                       Total
For the Three Years in the Period                  Number   Carrying     Paid-in    Available-   Compen-  Accumulated  Stockholders'
Ended December 31, 1997                         of shares      value     Capital     For-Sale    sation       Deficit        Equity
------------------------------------------------------------------------------------------------------------------------------------
(in thousands, except share data)
<S>                                            <C>          <C>            <C>          <C>       <C>       <C>            <C>
Balance, December 31, 1994                     20,711,176   $ 59,586       $  10        $ (15)       --     $ (13,922)     $ 45,659
   Issuance of common stock for services           79,637        653          --           --        --            --           653
   Issuance of common stock upon exercise
     of stock options                             403,199         73          --           --        --            --            73
   Issuance of common stock pursuant to
     follow-on public offering, net of stock
     issuance costs of $1,796,000               2,775,000     23,179          --           --        --            --        23,179
   Issuance of common stock under employee
     stock purchase plan                            6,600         46          --           --        --            --            46
   Net unrealized gain on investments
     available-for-sale                                --         --          --          175        --            --           175
   Deferred compensation related to employee
     common stock options granted                      --         --         292           --     $(292)           --            --
   Amortization of deferred compensation               --         --          --           --        19            --            19
   Net loss                                            --         --          --           --        --        (9,712)       (9,712)
                                               ------------------------------------------------------------------------------------
Balance, December 31, 1995                     23,975,612     83,537         302          160      (273)      (23,634)       60,092
   Issuance of common stock in connection
     with acquisition of technology             2,335,026     23,000          --           --        --            --        23,000
   Issuance of common stock options
     for services                                      --         --         451           --        --            --           451
   Issuance of common stock upon exercise
     of stock options                             123,185         89          --           --        --            --            89
   Issuance of common stock under employee
     stock purchase plan                           12,434        113          --           --        --            --           113
   Net unrealized loss on investments
     available-for-sale                                --         --          --         (191)       --            --          (191)
   Amortization of deferred compensation               --         --          --           --        58            --            58
   Net loss                                            --         --          --           --        --       (47,660)      (47,660)
                                               ------------------------------------------------------------------------------------
Balance, December 31, 1996                     26,446,257    106,739         753          (31)     (215)      (71,294)       35,952
   Issuance of common stock options for
     services                                          --         --          65           --        --            --            65
   Issuance of common stock upon exercise
     of stock options                             203,825        103          --           --        --            --           103
   Issuance of common stock under employee
     stock purchase plan                           53,881        151          --           --        --            --           151
   Net unrealized gain on investments
     available-for-sale                                --         --          --           97        --            --            97
   Amortization of deferred compensation               --         --          --           --        50            --            50
   Reversal of deferred compensation related
     to employee termination                           --         --        (165)          --       165            --            --
   Net loss                                            --         --          --           --        --       (34,633)      (34,633)
                                               ------------------------------------------------------------------------------------
Balance, December 31, 1997                     26,703,963   $106,993       $ 653        $  66     $  --     $(105,927)     $  1,785
                                               ====================================================================================
</TABLE>

The accompanying notes are an integral part of the financial statements.

                                        38

<PAGE>

                                                         Statement of Cash Flows

<TABLE>
<CAPTION>
Year Ended December 31,                                                                  1997        1996        1995
---------------------------------------------------------------------------------------------------------------------
(in thousands)
<S>                                                                                  <C>         <C>         <C>
Increase (Decrease) in Cash and Cash Equivalents
Cash flows from operating activities:
   Net loss                                                                          $(34,633)   $(47,660)   $ (9,712)
   Adjustments to reconcile net loss to net cash used in operating activities:
     Depreciation and amortization                                                      3,575         867         406
     Issuance of common stock in connection with acquisition of technology                 --      23,000          --
     Issuance of common stock and stock options for services                               65         451         478
     Changes in assets and liabilities:
       Decrease (increase) in inventories                                                 300        (357)       (229)
       Increase in prepaid expenses and other assets                                      (79)       (128)       (466)
       Increase in accounts payable and accrued expenses                                  646       2,519         970
      (Decrease) increase in deferred revenue                                            (374)     (1,143)      1,250
                                                                                     --------------------------------

         Net cash used in operating activities                                        (30,500)    (22,451)     (7,303)
                                                                                     --------------------------------

Cash flows from investing activities:
   Sales (purchases) of short-term investments, net                                     3,161     (14,011)    (38,716)
   Purchases of fixed assets                                                           (5,525)     (2,647)     (1,486)
   Investment in Medworks Corporation                                                  (1,000)         --          --
   Decrease in other assets                                                                61          75          72
                                                                                     --------------------------------

         Net cash used in investing activities                                         (3,303)    (16,583)    (40,130)
                                                                                     --------------------------------

Cash flows from financing activities:
   Proceeds from issuance of convertible subordinated notes, net of issuance costs         --      66,235          --
   Principal payments on capital lease obligations                                         --         (12)        (31)
   Proceeds from issuance of common stock, net of issuance costs                          254         202      23,297
                                                                                     --------------------------------

         Net cash provided by financing activities                                        254      66,425      23,266
                                                                                     --------------------------------

Net increase (decrease) in cash and cash equivalents                                  (33,549)     27,391     (24,167)

Cash and cash equivalents, beginning of period                                         45,556      18,165      42,332
                                                                                     --------------------------------

Cash and cash equivalents, end of period                                             $ 12,007    $ 45,556    $ 18,165
                                                                                     ================================

Supplemental disclosure of cash flow information:
   Interest paid                                                                     $  4,140    $      1    $      4
</TABLE>

The accompanying notes are an integral part of the financial statements.

                                       39

<PAGE>

Notes to Financial Statements

1: Nature of Business

UroMed Corporation (the "Company"), a Massachusetts corporation, was
incorporated in October 1990 to develop male and female health care products and
has developed or acquired technology in three core areas: prostate cancer,
urinary incontinence, and breast cancer. The Company has a direct hospital-based
business, an office-based continuum of continence care products and is
developing its investigational BreastExam, BreastCheck and BreastView electronic
palpation technology in order to aid physicians and patients in the important
mission of finding suspicious breast lumps earlier.

2: Summary of Significant Accounting Policies

Basis of Presentation

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from these estimates.

      Operations of the Company are subject to certain risks and uncertainties
including, but not limited to, uncertainties related to clinical trials,
regulatory approvals, technological uncertainty, uncertainty of future
profitability and access to capital, and dependence on collaborative
relationships and key personnel.

Cash Equivalents and Short-Term Investments

The Company accounts for investments in accordance with Statement of Financial
Accounting Standards No. 115, "Accounting for Certain Investments in Debt and
Equity Securities" ("SFAS 115"), which requires that investments in debt and
equity securities be classified as trading, available-for-sale or
held-to-maturity. Except for those debt securities classified as
held-to-maturity, securities are reported in the balance sheet at fair value.
Held-to-maturity securities are reported in the balance sheet at amortized cost.
Any unrealized gains and losses on trading or available-for-sale securities are
included in current period earnings or are reported as a separate component of
stockholders' equity, respectively. Upon the sale of securities (the cost of
which are based upon the specific identification method), realized gains and
losses are reported in the statement of operations. At December 31, 1997 and
1996, all of the Company's investments are classified as available-for-sale.

      The Company invests its excess cash primarily in securities of U.S.
government agencies, high grade corporate debt obligations and money market
funds that are subject to minimal credit and market risks. The Company considers
investments with original maturities of three months or less to be cash
equivalents. All other investments are classified as short-term investments
because they are highly liquid and are available to meet working capital needs.

Revenue Recognition

Revenue from product sales is recorded upon shipment of product to the customer.
The Company accrues anticipated product warranty costs at that time.

      Deferred revenue represents fees received by the Company upon the
execution of distribution agreements. Initially, these fees were refundable
under certain conditions and, accordingly, upon receipt they were classified as
deferred revenue. As these amounts become non-refundable, they are recognized as
revenue over a period approximating one year, or as product is shipped to the
distributors.

Major Customers

During the three years ended December 31, 1997, the Company's revenue has been
derived primarily from two of its distributors. Revenue from the Company's
distributor for Germany amounted to 34% and 87% of total revenue during the
years ended December 31, 1996 and 1995, respectively. Revenue from the Company's
distributor for Scandinavia, the United Kingdom and The Netherlands amounted to
75% and 63% of total revenue during the years ended December 31, 1997 and 1996,
respectively.

      Of total revenue reported, approximately 75%, 43% and 0% for the years
ended December 31, 1997, 1996 and 1995, respectively, resulted from the
recognition of revenue (initially deferred) related to payments received by the
Company upon the signing of distribution agreements.

Inventories

Inventories are stated at the lower of cost or market, cost being determined
using the first-in, first-out method. Cost includes material, labor and
manufacturing overhead.

Fixed Assets

Fixed assets are recorded at cost and depreciated over the estimated useful
lives of the assets using the straight-line method. Leasehold improvements are
depreciated using the straight-

                                       40

<PAGE>

                                                   Notes to Financial Statements

line method, over their estimated useful lives or the term of the lease, if
shorter. Additions, renewals and betterments are capitalized. Repair and
maintenance costs are expensed as incurred.

Financing Costs

Deferred financing costs, which are included in other assets, are being
amortized over the seven-year life of the Company's 6% Convertible Subordinated
Notes due October 15, 2003 ("Notes") using the straight-line method, which
approximates the interest method. Unamortized costs at December 31, 1997 and
1996 are $2,288,000 and $2,683,000, respectively.

Accounting for the Impairment of Long-Lived Assets

The Company periodically evaluates its long-lived assets whenever events or
changes in circumstances indicate that the carrying amount of an asset may not
be recoverable. At the occurrence of such an event or change in circumstances,
the Company evaluates a potential impairment of an asset based on estimated
future undiscounted cash flows. In the event that future undiscounted cash flows
are less than the carrying amount of such asset, an impairment loss is
recognized for the difference between estimated fair value and the carrying
amount of the asset. Based on management's assessment, during 1997 the Company
recorded an impairment detailed in Note 6.

Net Loss Per Share

In February, 1997, the Financial Accounting Standards Board, ("FASB") issued
Statement of Financial Accounting Standards No. 128, "Earnings Per Share" ("SFAS
128") which changed the method of computing earnings per share. SFAS 128
requires the presentation of "basic" earnings per share and "diluted" earnings
per share. Basic earnings per share is computed by dividing net loss by the
weighted average shares of outstanding common stock. For purposes of computing
diluted earnings per share, the denominator includes both the weighted average
shares of outstanding common stock and dilutive potential common stock. As
required, the Company adopted SFAS 128 in the fourth quarter of 1997. All prior
period earnings per share amounts have been restated to comply with SFAS 128.

      For each of the periods presented, basic and diluted earnings per share
are the same due to the antidilutive effect of potential common stock shares.
Antidilutive potential common stock excluded from the 1997, 1996 and 1995
computation included 1,722,538, 1,546,858 and 1,268,523 common shares,
respectively, issuable upon the exercise of stock options. Antidilutive
potential common stock excluded from the 1997 and 1996 computations included
5,195,391 common shares issuable upon the conversion of the Company's Notes.

Accounting for Stock-Based Compensation

The Company accounts for stock-based awards to its employees using the intrinsic
value based method as prescribed by Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees," and related interpretations and has
adopted the provisions of Statement of Financial Accounting Standards No. 123,
"Accounting for Stock-Based Compensation" ("SFAS 123") through disclosure only
(Note 11).

Reclassifications

Certain prior year amounts have been reclassified to conform to the current year
financial statement presentation. The reclassifications had no impact on net
loss for these years.

Recently Enacted Accounting Pronouncements

In June 1997, the FASB issued Statement of Financial Accounting Standards No.
130, "Reporting Comprehensive Income" ("SFAS 130") and Statement of Financial
Accounting Standards No. 131, "Disclosures about Segments of an Enterprise and
Related Information" ("SFAS 131"). The Company will implement SFAS 130 and SFAS
131 as required in 1998, which will require the Company to report and display
separately certain information related to comprehensive income and operating
segments but will not result in any changes to previously recorded amounts.

3: Acquisition of Technology

In May 1996, the Company acquired all of the incontinence technology of the ASI
Liquidating Trust, the successor to Advanced Surgical Intervention, Inc.,
including the Miniguard(TM) Patch, an FDA-cleared prescription adhesive patch
placed externally against the urethral opening to help block leakage in women
with mild-to-moderate stress urinary incontinence. The Company purchased the
Miniguard Patch technology for $30.0 million, consisting of $7.0 million in cash
and common stock valued at $23.0 million. The value of the common stock issued
was based on the market value of the

                                       41

<PAGE>

common stock for the five-day period preceding the transaction. The acquisition
of this incontinence technology has been accounted for as purchased in-process
research and development and, as a result, the purchase price and related
expenses of $0.2 million were charged to operations in 1996. In 1997, the name
Miniguard Patch was changed to Impress Softpatch.(TM)

4: Investments

Following is a summary of available-for-sale investments, by balance sheet
classification:
<TABLE>
<CAPTION>

                                   Amortized       Unrealized
                                        cost      Gains Losses        Fair value
-------------------------------------------------------------------------------
(in thousands)

<S>                                 <C>          <C>        <C>        <C>
December 31, 1997:
Cash equivalents:
  U.S. Government obligations       $  1,495     $  --      $  --      $  1,495
  Corporate debt obligations           4,961        --         --         4,961
  Money market funds                   4,004        --         --         4,004
                                    -------------------------------------------
                                    $ 10,460     $  --      $  --      $ 10,460
                                    ===========================================
Short-term investments:
  U.S. Government obligations       $  3,991     $   6      $  --      $  3,997
  Corporate debt obligations          48,961        60         --        49,021
                                    -------------------------------------------
                                    $ 52,952     $  66      $  --      $ 53,018
                                    ===========================================
December 31, 1996:
Cash equivalents:
  Corporate debt obligations        $ 38,741     $  --      $  --      $ 38,741
  Money market funds                   6,003        --         --         6,003
                                    -------------------------------------------
                                    $ 44,744     $  --      $  --      $ 44,744
                                    ===========================================
Short-term investments:
  U.S. Government obligations       $ 17,263     $  --      $ (24)     $ 17,239
  Corporate debt obligations          38,850        --         (7)       38,843
                                    -------------------------------------------
                                    $ 56,113     $  --      $ (31)     $ 56,082
                                    ===========================================
</TABLE>

      At December 31, 1997, the fair value of short-term investments having
contractual maturities of one year or less totaled $44,886,000 and the fair
value of short-term investments with contractual maturities greater than one
year but less than four years totaled $8,132,000. The proceeds from sales of
securities amounted to approximately $21,098,000 and $15,853,000 for the years
ended December 31, 1997 and 1996, respectively. Gross realized gains and losses
on these sales were not significant.

5: Inventories

Inventories consist of the following:
<TABLE>
<CAPTION>

December 31,                      1997    1996
----------------------------------------------
(in thousands)
<S>                              <C>      <C>
Raw materials                    $ 23     $279
Work in process                     9      112
Finished goods                    255      196
----------------------------------------------
                                 $287     $587
==============================================
</TABLE>

6: Fixed Assets

Fixed assets consist of the following:
<TABLE>
<CAPTION>

                                Useful Life      December 31,
                                   in Years    1997       1996
---------------------------------------------------------------
(in thousands)
<S>                             <C>           <C>        <C>
Machinery and equipment               3-4     $1,617     $1,756
Computer and office equipment         3-4      3,105      2,733
Leasehold improvements                  7        924        384
Machinery and equipment not
 yet placed in service                 --      3,789        492
                                             ------------------
                                               9,435      5,365
Less - Accumulated depreciation
 and amortization                              3,078      1,403
                                             ------------------
                                              $6,357     $3,962
                                             ==================
</TABLE>

      As a result of the less-than-expected market reception of the Reliance
Insert, during 1997 the Company recorded an impairment loss of $1,455,000
related to automated manufacturing equipment that was used or was intended to be
used in production of the Reliance Insert. The loss of $1,455,000 represented
the carrying value of the equipment at the time the loss was recorded. The loss
has been included in depreciation and amortization expense within the research
and development ($900,000) and cost of sales ($555,000) components of the
Statement of Operations.

7: Investment in Medworks Corporation

In August 1997, the Company invested $1,000,000 in the preferred stock of
Medworks Corporation of Louisville, KY as part of a license and supply agreement
between the Company and Medworks Corporation, enabling the Company to market,
sell and distribute Medworks' surgical technology to correct female urinary
stress incontinence. This investment is accounted for under the cost method and
is included in other assets in the balance sheet.

                                       42

<PAGE>

                                                   Notes to Financial Statements

8. Accrued Expenses

Accrued expenses consist of the following:
<TABLE>
<CAPTION>

December 31,                        1997         1996
-----------------------------------------------------
(in thousands)
<S>                               <C>          <C>
Clinical trials                   $  565       $  671
Professional fees                    944          809
Interest                             863          863
Employee-related                   1,088          620
Other                                918        1,253
                                ---------------------
                                  $4,378       $4,216
                                =====================
</TABLE>

9: Convertible Subordinated Notes

In October 1996, the Company completed the sale of $69.0 million of its Notes.
The Notes are convertible at any time into shares of common stock of the Company
at a conversion price of $13.281 per share, subject to adjustment under certain
circumstances. Interest on the Notes is payable each April 15 and October 15
unless previously converted or repurchased. The Notes are redeemable at the
option of the Company on or after October 15, 1999, at specified redemption
prices, ranging from 100.857% to 103.429% of the face amount per note plus
accrued and unpaid interest to the date of redemption. The Notes are unsecured
obligations of the Company and are subordinated to all other Senior Debt (as
defined) of the Company.

10: Stockholders' Equity

Preferred Stock

The Company has authorized 500,000 shares of $.01 par value preferred stock, of
which none have been issued at December 31, 1997. Preferred stock may be issued
at the discretion of the Board of Directors of the Company with such
designations, rights and preferences as the Board of Directors may determine.
Upon issuance, the preferred stock may include, among other things,
extraordinary dividend, redemption, conversion, voting or other rights which may
adversely affect the holders of the common stock.

Common Stock

At December 31, 1997, the Company has reserved 2,126,787 shares of common stock
for issuance pursuant to exercise of common stock options granted under the
Stock Option Plan, 227,085 shares of common stock for issuance under the
Employee Stock Purchase Plan, and 5,195,391 shares for issuance upon conversion
of the Notes.

      On November 13, 1995, the Company completed a follow-on public offering of
2,775,000 shares of its common stock at a price of $9.00 per share (including
the exercise of the underwriters' overallotment option). The net proceeds to the
Company were approximately $23,179,000.

Shareholder Rights Plan

In June 1997, the Company's Board of Directors adopted a Shareholder Rights
Plan. This Plan provides shareholders with special purchase rights under certain
circumstances, including if any new person or group acquires 15 percent or more
of the Company's outstanding common stock.

11: Employee Benefit Plans

Stock Option Plan

On June 7, 1991, the Company adopted the 1991 Stock Option Plan (the "Plan")
which provides for the granting of either incentive stock options or
non-statutory stock options to employees, officers, directors and consultants of
the Company. The Plan, as amended, allows for a maximum of 3,200,000 shares of
common stock to be issued.

      The exercise price of any incentive stock option shall not be less than
the fair value of the stock on the date of grant or less than 110% of the fair
value in the case of optionees holding more than 10% of the total combined
voting power of all classes of stock of the Company. Options under the plan are
exercisable over periods determined by the Board of Directors, not to exceed ten
years from the date of grant, except for incentive stock options granted to
optionees holding more than 10% of the total combined voting power of all
classes of stock, which must be within five years.

      Under the Plan, non-employee directors of the Company will receive options
to purchase 20,000 shares of common stock upon their election to the Board of
Directors and, after having served on the Board of Directors for one year,
options to purchase 750 shares of common stock on a quarterly basis, up to a
maximum of 24 grants. All of these option grants are exercisable over a ten-year
period and must have an exercise price equal to the fair market value of the
shares on the grant date.

      In September 1997, the Company, on a selective basis to include no more
than one option grant per employee, elected to reprice 159,300 outstanding
common stock options to reflect the current market value per share of common
stock. The cancellation and issuance of replacement options is recorded in
the option activity below.

                                       43

<PAGE>

Option activity for the years ended December 31, 1997, 1996 and 1995 is
summarized as follows:

<TABLE>
<CAPTION>
Years Ended December 31,                                 1997                  1996                   1995
--------------------------------------------------------------------   --------------------   -------------------
                                                            Weighted               Weighted              Weighted
                                                             average                average               average
                                                            exercise               exercise              exercise
                                                   Shares      price     Shares       price     Shares      price
--------------------------------------------------------------------   --------------------   -------------------

<S>                                              <C>          <C>      <C>          <C>       <C>          <C>
Outstanding at beginning of period               1,546,858    $5.31    1,268,523    $ 3.11    1,394,005    $1.19
   Granted                                         921,510    $4.14      461,975    $10.25      319,650    $7.67
   Cancelled                                      (542,005)   $8.22      (60,455)   $ 6.51      (41,933)   $2.09
   Exercised                                      (203,825)   $0.51     (123,185)   $ 0.72     (403,199)   $0.18
                                                 ---------             ---------              ---------
Outstanding at end of period                     1,722,538    $4.33    1,546,858    $ 5.31    1,268,523    $3.11
                                                 =========             =========              =========
Options exercisable at end of period               625,869    $2.81      598,431    $ 1.39      471,803    $0.67
                                                 =========             =========              =========
Weighted average fair value of options
   granted during the period                         $2.01                 $6.73                  $4.68
                                                 =========             =========              =========
</TABLE>


At December 31, 1997, options to purchase 404,249 shares of common stock were
available for future grants under the Plan.

   The following table summarizes information about stock options outstanding
and exercisable at December 31, 1997:

<TABLE>
<CAPTION>

                                             Options outstanding
--------------------------------------------------------------------------------
                                                     Weighted
                                                      average           Weighted
                                 Number             remaining            average
Range of exercise prices    outstanding      contractual life     exercise price
--------------------------------------------------------------------------------
<S>                         <C>              <C>                  <C>
$ .01 to $.91                   374,181                   4.7              $0.36
$3.04 to $5.38                1,027,124                   8.6              $4.06
$5.50 to $13.88                 321,233                   7.7              $9.81
                              ---------

Total                         1,722,538
                              =========
</TABLE>

<TABLE>
<CAPTION>

                                             Options exercisable
--------------------------------------------------------------------------------
                                                                        Weighted
                                                    Number               average
Range of exercise prices                       exercisable        exercise price
--------------------------------------------------------------------------------
<S>                                            <C>                <C>
$ .01 to $  .91                                    350,066                 $0.36
$3.04 to $ 5.38                                    178,650                 $4.26
$5.50 to $13.88                                     97,153                 $9.00
                                                   -------

Total                                              625,869
                                                   =======
</TABLE>

Fair Value Disclosures

As discussed in Note 2, the Company has adopted SFAS 123 through disclosure
only. Had compensation cost for the Company's option plans been determined based
on the fair value at the grant dates, as prescribed by SFAS 123, the Company's
net loss and net loss per share would have been as follows:

<TABLE>
<CAPTION>

Year Ended December 31,             1997        1996        1995
--------------------------------------------------------------------------------
(in thousands, except per share data)
<S>                               <C>         <C>         <C>
Net loss:
 As reported                      $(34,633)   $(47,660)   $(9,712)
 Pro forma                        $(35,477)   $(48,620)   $(9,912)

Basic and diluted net
 loss per share:
 As reported                      $  (1.30)   $  (1.87)   $ (0.46)
 Pro forma                        $  (1.33)   $  (1.90)   $ (0.47)
</TABLE>

The fair value of each option grant is estimated on the date of grant using the
Black-Scholes model with the following assumptions used for grants for all
periods: dividend yield of 0.0%; risk-free interest rates ranging from 5.5% to
6.8%; expected option terms of 0.3 years to 5.8 years; and a volatility of .60.

                                       44

<PAGE>

                                                   Notes to Financial Statements

Employee Stock Purchase Plan

On May 19, 1995, the Company approved the 1995 Employee Stock Purchase Plan.
This plan provides for the purchase by employees of up to 300,000 shares of
common stock at 85% of the fair market value on the first or last day of the
offering period (as defined in the plan), whichever is lower. During the year
ended December 31, 1997, 53,881 shares were issued under the plan at a range of
$2.98 to $3.00 per share. During the year ended December 31, 1996, 12,736 shares
were issued under the plan at a range of $8.29 to $11.05 per share. During the
year ended December 31, 1995, 6,600 shares were issued under the plan at $6.91
per share.

401(k) Retirement Plan

On January 1, 1993 the Company adopted a 401(k) Retirement Plan (the "401(k)
Plan") under Section 401(k) of the Internal Revenue Code. The 401(k) Plan covers
substantially all employees who meet minimum age and service requirements. The
401(k) Plan is non-contributory on the part of the Company.

12: Income taxes

The components of deferred income tax benefit (expense) are as follows:

<TABLE>
<CAPTION>

Year Ended December 31,                      1997           1996           1995
--------------------------------------------------------------------------------
(in thousands)
<S>                                      <C>            <C>            <C>
Income tax benefit:
 Federal                                 $ 11,315       $ 15,497       $  3,317
 State                                      3,678          4,796          1,082
                                         ---------------------------------------
                                           14,993         20,293          4,399
Change in deferred tax
 asset valuation allowance                (14,993)       (20,293)        (4,399)
                                         ---------------------------------------
                                         $     --       $     --       $     --
                                         =======================================
</TABLE>

No federal or state taxes were payable in any year as a result of losses
incurred.

Deferred tax assets consist of the following:

<TABLE>
<CAPTION>

Year Ended December 31,                                    1997            1996
--------------------------------------------------------------------------------
(in thousands)
<S>                                                    <C>             <C>
Deferred tax assets:
 Purchased research and development                    $ 11,277        $ 11,882
 Deferred research and development
  expenses                                                3,921              --
 Accrued expenses                                           674             582
 Depreciation                                             1,149             253
 Operating reserves                                         476             176
 Deferred revenue                                            --             154
 Tax credit carryforwards                                 2,262           1,383
 Net operating loss carryforwards                        25,863          16,353
 Other                                                      344             190
                                                       -------------------------
Gross deferred tax assets                                45,966          30,973
Deferred tax asset
 valuation allowance                                    (45,966)        (30,973)
                                                       -------------------------
                                                       $     --        $     --
                                                       =========================
</TABLE>

      A reconciliation between the amounts of reported income tax benefit
(expense) and the amount determined by applying the U.S. federal statutory rate
of 35% to net loss follows:

<TABLE>
<CAPTION>

Year Ended December 31,                      1997           1996           1995
--------------------------------------------------------------------------------
(in thousands)
<S>                                      <C>            <C>            <C>
Net loss at statutory rate               $ 11,892       $ 16,681       $  3,399

 State tax benefit, net of
  federal tax liability                     2,098          2,988            600

 Federal and state research
  and development credits                     710            292            201

 Non-qualified stock
  options and warrants                        183             82            237

Other                                         110            250            (38)
                                         ---------------------------------------
                                           14,993         20,293          4,399
Benefit of loss not
 recognized, increase in
  valuation allowance                     (14,993)       (20,293)        (4,399)
                                         ---------------------------------------
                                         $     --       $     --       $     --
                                         =======================================
</TABLE>

                                       45

<PAGE>

      The Company has provided a valuation allowance for the full amount of the
deferred tax assets since there is no assurance that future tax benefits will be
realized. As the Company achieves profitability, these deferred tax assets would
be available to offset future income tax liabilities and expense. Of the
$45,966,000 valuation allowance at December 31, 1997, approximately $1,000,000
relating to deductions for non-qualified stock options will be credited to
additional paid-in capital upon realization.

      At December 31, 1997, the Company had net operating loss carryforwards for
federal and state income tax reporting purposes of approximately $63,000,000. At
December 31, 1997, the Company had research and development tax credit
carryforwards for federal and state income tax reporting purposes of $1,423,000
and $839,000, respectively. The federal carryforwards expire between the years
2006 and 2017. The state carryforwards expire between the years 1998 and 2003.

      Ownership changes, as defined in the Internal Revenue Code (the "Code"),
have limited the amount of net operating loss and tax credit carryforwards that
can be used annually to offset future taxable income or tax liabilities. The
annual limitation amount as defined in the Code is approximately $8,600,000 and
the net operating loss and tax credit carryforwards subject to this limitation
are approximately $20,900,000 and $802,000, respectively. Future changes in
ownership could further affect the limitation in future years.

13: Commitments

Leases

The Company leases its present office and manufacturing space under operating
leases which expire on various dates through 2003. Total rent expense under
operating leases was approximately $532,000, $390,000 and $334,000 for the years
ended December 31, 1997, 1996 and 1995, respectively. Future minimum payments
for the operating leases as of December 31, 1997 are as follows:

<TABLE>
<CAPTION>

                                Operating
                                   Leases
-----------------------------------------
(in thousands)
<S>                             <C>
1998                               $  643
1999                                  615
2000                                  617
2001                                  623
2002                                  205
Thereafter                             59
                                   ------
Total minimum lease payments       $2,762
                                   ======
</TABLE>

14: Subsequent Event

The Company's Board of Directors approved a restructuring plan during the first
quarter of 1998. In accordance with this plan, the Company has restructured its
operations to increase its emphasis on its hospital-based sales efforts and to
decrease its investment in the consumer-oriented continence care business, which
the Company believes will be best approached through utilizing marketing
partners. As a result, the Company expects to record a restructuring charge in
the first quarter of 1998 of approximately $1,000,000 consisting primarily of
employee termination benefits and costs to exit certain leased facilities.

                                       46

<PAGE>

                        UroMed Corporation
SCHEDULE II  Valuation and Qualifying Accounts and Reserves

<TABLE>
<CAPTION>

                  Balance at   Charged to              Balance at
                  beginning     costs and                end of
Description        of period     expenses   Write-offs   period

<S>               <C>          <C>          <C>        <C>

Allowance for
  uncollectible
  accounts
Year ended
  December 31,
  1997              $ 36,000    $    --     ($ 36,000)   $  --
Year ended
  December 31,
  1996              $ 21,000     $ 15,000       --      $ 36,000
Year ended
  December 31,
  1995                  --       $ 21,000       --      $ 21,000
Reserve for
  inventory
  valuation
Year ended
  December 31,
  1997              $919,000     $740,000   ($95,000)   $1,564,000
Year ended
  December 31,
  1996              $530,000     $466,000   ($77,000)   $919,000

Year ended
  December 31,
  1995                  --       $530,000       --      $530,000

</TABLE>

                                       47
<PAGE>

Item 9.  Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure

None.

PART III

Item 10.  Directors and Executive
Officers of the Registrant

Executive Officers of the Registrant

The names of the Company's executive officers and certain information about them
are set forth below as of March 25, 1998:

<TABLE>
<CAPTION>

Name                      Age                    Position
<S>                       <C>      <C>

Richard M. Epstein        41       Managing Director of New Product Research,
                                   Development and Acquisitions
Robert C. Lorette         46       Vice President, Corporate Development
Neil   J. Magner          42       Vice President, Manufacturing
Joanne H. Moon            46       Managing Director of Operations
Paul J. Murphy            49       Chief Financial Officer and Treasurer
John G. Simon             35       Chairman of the Board of Directors,
                                   President, and Chief Executive Officer
Alan I. West              50       Managing Director, Assurance Medical Division

</TABLE>

RICHARD M. EPSTEIN joined the Company as Managing Director of Male Healthcare
Programs in October 1996. In February, 1998 he became the Managing Director of
New Product Research, Development and Acquisition. Prior to joining the Company,
he served as Vice President Sales, Marketing and Business Development for
Nextran, an affiliate of Baxter Healthcare. Mr. Epstein helped create Nextran
during his ten years with Baxter Healthcare where he also held positions as
Director of the Transplant Business and Director of Advanced Product and New
Business Development. Mr. Epstein holds a B.S. from the University of Illinois,
an M.S. from Stanford University and an M.B.A. from the University of Chicago.

ROBERT C. LORETTE joined the Company in February 1996 as Vice President,
Corporate Development, with over 18 years of legal and business experience. From
1985 to 1995, Mr. Lorette was employed by Bausch & Lomb Incorporated, a
diversified healthcare and optics company, where he held the positions of Vice
President and General Manager, Specialty


                                       48
<PAGE>

Products for the Charles River Laboratories Division; Vice President and General
Manager of the Criterion Vision business unit; and Senior Counsel in the Law
Department. From 1978 to 1987, he practiced law in Connecticut. Mr. Lorette
holds an A.B. from the College of the Holy Cross and a J.D. and an M.P.A. from
Syracuse University.

NEIL J. MAGNER joined the Company in October 1994 as Director of Manufacturing.
In September 1996 he was promoted to Vice President, Manufacturing. Prior to
joining the Company he was employed from 1979 through 1994 by Millipore
Corporation, a manufacturer of pharmaceutical and microelectronics filters and
systems. There he held various manufacturing management positions, most recently
serving as the Plant Manager of the Process Systems Division. Mr. Magner holds a
B.A. from Merrimack College and an M.S. from Lesley College.

JOANNE H. MOON joined the Company in May 1991 as Vice President, Operations,
with over 23 years of manufacturing experience. In September 1996 she was
promoted to Managing Director of Continence Care. In February, 1998 she became
Managing Director of Operations. From 1978 to 1991, Ms. Moon was employed by the
U.S.C.I. Division of Bard, a manufacturer of cardiovascular medical devices,
where she held the positions of Plant Manager, Director of Manufacturing and
Director of Quality Assurance. Ms. Moon holds a B.A. from Upsala College.

PAUL J. MURPHY joined the Company in June 1994 as Chief Financial Officer and
Treasurer. Previously, he served as Vice President, Finance and Treasurer of
Xyplex, Inc., a local area network company, from 1986 to 1994 and as Chief
Financial Officer from 1990 to 1994. He served as Vice President, Finance of
Ztel, Inc. from 1985 to 1986 and as Vice President, Finance of Lexidata
Corporation from 1979 to 1985. Mr. Murphy holds a B.S. from Brooklyn College and
an M.B.A. from the Harvard Graduate School of Business Administration.

JOHN G. SIMON is the founder of UroMed and has served as President, Chief
Executive Officer and Chairman of the Board of Directors of the Company since
inception in 1990. Prior to founding the Company, Mr. Simon served as an
associate at Highland Capital Partners, L.P., a venture capital firm, from 1988
to 1990, and as a research associate at Charles River Ventures, a venture
capital firm, from 1985 to 1987. He was also the Vice President of Marketing and
Sales for Adaptive Networks Inc. from 1987 to 1988. Mr. Simon holds a B.A. from
Harvard University and received a second B.A. from Oxford University while on a
Rhodes Scholarship.

ALAN I. WEST joined the Company in February 1996 as Managing Director of Female
Healthcare Programs, bringing with him twenty years of medical product
development experience. In February, 1998 he became Managing Director, Assurance
Medical Division. Most recently, he was Business Manager of Vision Sciences, an
endoscopy company. Previously, he joined Boston Scientific Corporation's
Microvasive division, and he left there in 1990 as Vice President of Research
and Development. From 1976 to 1981, he worked in research and development at the
Codman division of Johnson & Johnson and as Marketing Manager of a small company
involved in biomechanics, sports medicine and sensors. Mr. West holds a B.S.
from Brown University and an M.S. from Tufts University.

Information relating to the Directors of the Company will be set forth in the
sections entitled "Election of Directors", "Background of Directors" and
"Director Compensation" on pages 5 and 6 of the 1998 Proxy Statement, which
sections are incorporated herein by reference. Information relating to
compliance with Section 16(a) of the Securities Exchange Act of 1934 will be set
forth in the section entitled "Reports of Beneficial Ownership" on pages 11 and
12 of the 1998 Proxy Statement, which section is incorporated herein by
reference.


                                       49
<PAGE>

Item 11.  Executive
Compensation

Information relating to executive compensation will be set forth in the section
entitled "Executive Compensation" on pages 7 through 11 of the 1998 Proxy
Statement, which section is incorporated herein by reference.

Item 12.  Security Ownership of Certain
Beneficial Owners and Management

Information relating to ownership of securities of the Company by certain
beneficial owners and management will be set forth in the section entitled
"Stock Ownership of Principal Stockholders and Management" on page 4 of the 1998
Proxy Statement, which section is incorporated herein by reference.

Item 13.  Certain Relationships and
Related Transactions

None.


                                       50
<PAGE>

PART IV

Item 14.  Exhibits and Financial
Statement Schedules

(a)(1) Index to Financial Statments

       The financial statements filed as part of this Annual Report on Form 10-K
       are listed above under Part II, Item 8.

(a)(2) Index to Financial Statement Schedules

       The financial statement schedule filed as part of this Annual Report on
       Form 10-K is listed above under Part II, Item 8.

(a)(3) Index to exhibits. The following documents are filed as exhibits to this
       Annual Report on Form 10-K.

<TABLE>
<CAPTION>

Exhibit
No.                       Description

<S>           <C>

  3.2         Amended and Restated By-Laws of the Registrant
              *(a) (filed as Exhibit No.  3.2)

  3.3         Restated Articles of Organization of the Registrant
              *(b) (filed as Exhibit No.  3.3)

  10.1        Amended and Restated Registration Rights Agreement dated as of
              September 15, 1993 among the Registrant and certain of its
              security holders
              *(a) (filed as Exhibit No. 10.1)

  10.2        Consulting Agreement dated as of November 3, 1993
              between the Registrant and Kenneth Thurston
              *(a) (filed as Exhibit No.  10.5)

  10.3        Amended and Restated 1991 Stock Option Plan of the
              Registrant
              *(c) (filed as Exhibit No.  4.3)

  10.4        UroMed Corporation 1995 Employee Stock Purchase Plan
              *(d) (filed as Exhibit No.  4.3)

  10.5        Forms of Nonstatutory Common Stock Option Agreements
              between the Registrant and its Directors
              *(a) (filed as Exhibit No.  10.7)

  10.6        Forms of Nonstatutory Common Stock Option Agreements
              between the Registrant and members of its Medical
              Advisory Board and its Scientific Advisory Board
              *(a) (filed as Exhibit No.  10.8)

  10.7        Forms of Incentive Stock Option Agreements between the
              Registrant and its Employees
              *(a) (filed as Exhibit No.  10.9)

</TABLE>

                                       51
<PAGE>

<TABLE>
<CAPTION>

Exhibit
No.                       Description

<S>           <C>


  10.8        Form of Consulting, Confidentiality and Non-Competition Agreement
              between the Registrant and members of its Medical Advisory Board
              and its Scientific Advisory Board
              *(a) (filed as Exhibit No. 10.10)

  10.9        Employment Agreements between the Company and Joanne Moon and Carl
              J. Wisnosky *(a) (filed as Exhibit No.  10.15)

  10.10       Employment Agreement between the Company and Paul J. Murphy
              *(e) (filed as Exhibit No.  10.1)

  10.11       Employment Agreement between the Company and Stephen A. Guida
              *(f) (filed as Exhibit 10.12)

  10.12       Nonstatutory Common Stock Option Agreement between the
              Registrant and Stephen A.  Guida
              *(f) (filed as Exhibit 10.13)

  10.13       Lease between the Company and Trustees of New England
              Industrial Center *(f) (filed as Exhibit No.  10.1)

  10.14       Employment Agreement between the Company and John G. Simon
              *(g) (filed as Exhibit No.  10.2)

+ 10.15       Contract Purchase Order No.  94250 between the Company
              and Innovative Products & Equipment ("IPE")
              *(g) (filed as Exhibit No.  10.4)

++10.16       Contract Purchase Order No.  94004 between the Company
              and IPE
              *(f) (filed as Exhibit No.  10.2)

+++10.17      Distributorship Agreement between the Company and E.
              Tosse & Co.  MbH
              *(h) (filed as Exhibit No.  10.16)

++++ 10.18    Distributorship Agreement between the Company and Porges
              S.A. *(i) (filed as Exhibit No.  10.1)

++++ 10.19    Distributorship Agreement between the Company and Astra
              Tech AB
              *(i) (filed as Exhibit No.  10.2)

     10.20    Asset Purchase Agreement, dated as of May 9, 1996, among the
              Registrant, Robert F. Rosenbluth and Donald B. Milder as Trustees,
              the ASI Liquidating Trust and the Indemnifying Beneficiaries named
              on Schedule A thereto.
              *(k) (filed as Exhibit 2.1)

     10.21    Registration Rights Agreement, dated as of May 9, 1996, among the
              Registrant and certain of its Securityholders.
              *(l) (filed as Exhibit 4.4)

     10.22    Indenture, dated as of October 15, 1996, by and between the
              Registrant, as issuer, and State Street Bank and Trust Company, as
              Trustee
              *(m) (filed as Exhibit 10.1)

     10.23    Purchase Agreement, dated as of October 8, 1996, by and between
              the Registrant and the Purchasers (as defined therein)
              *(m) (filed as Exhibit 10.2)

     10.24    Employment Agreement between the Registrant and Richard
              Epstein.
              *(n) (filed as Exhibit 10.24)

</TABLE>

                                       52
<PAGE>

<TABLE>
<CAPTION>

Exhibit
No.                       Description

<S>           <C>


      10.25   Employment Agreement between the Registrant and Alan
              West.
              *(n) (filed as Exhibit 10.25)

      10.26   Employment Agreement between the Registrant and Robert
              Lorette.
              *(n) (filed as Exhibit 10.26)

      10.27   Employment Agreement between the Registrant and Neil
              Magner.
              *(n) (filed as Exhibit 10.27)

      10.28   Employment Agreement, dated as of March 17, 1997,
              between the Company and John G.  Simon
              *(n) (filed as Exhibit 10.28)

      10.29   Rights Agreement, dated as of July 2, 1997.
              *(o) (filed as Exhibit 10.29)

  21          Subsidiaries of Registrant
              *(a) (filed as Exhibit No.  21)

  23          Consent of Price Waterhouse LLP

  27          Financial Data Schedule

</TABLE>


All exhibit descriptions followed by an asterisk (*) were previously filed with
the Securities and Exchange Commission (the "SEC") as Exhibits to, and are
hereby incorporated by reference from, the document to which the letter in
parentheses following the asterisk corresponds, as set forth below. The Exhibit
number of the document in that previous filing is indicated in parentheses after
the incorporation by reference code:

(a) Registrant's Registration Statement on Form S-1, as amended, (Registration
No. 33-74282).

(b) Registrant's Annual Report on Form 10-K for its fiscal year ended December
31, 1994.

(c) Registrant's Registration Statement on Form S-8 filed with the Securities
and Exchange Commission on October 18, 1995 (Registration No. 33-98262).

(d) Registrant's Registration Statement on Form S-8 filed with the Securities
and Exchange Commission on October 18, 1995 (Registration No. 33-98264).

(e) Registrant's Quarterly Report on Form 10-Q for its fiscal quarter ended June
30, 1994.

(f) Registrant's Quarterly Report on Form 10-Q for its fiscal quarter ended
September 30, 1994.

(g) Registrant's Quarterly Report on Form 10-Q for its fiscal quarter ended
March 31, 1994.

(h) Registrant's Annual Report on Form 10-K for its fiscal year ended December
31, 1994.

(i) Registrant's Quarterly Report on Form 10-Q for its fiscal quarter ended
September 30, 1995.

(j) Registrant's Annual Report on Form 10-K for its fiscal year ended December
31, 1995.

(k) Registrant's Current Report on Form 8-K filed May 9, 1996.

(l) Registrant's Registration Statement on Form S-3 (File No. 333-03843) filed
May 16, 1996.

(m) Registrant's Quarterly Report on Form 10-Q for its fiscal quarter ended
September 30, 1996.

(n) Registrant's Annual Report on Form 10-K for its fiscal year ended
December 31, 1996.

(o) Registrant's Current Report on Form 8-K filed July 2, 1997.


                                       53
<PAGE>

+ An unexpired order granting confidential treatment to deleted portions of
Exhibit 10.15 was issued on July 19, 1994.

++ An unexpired order granting confidential treatment to deleted portions of
Exhibit 10.16 was issued on December 13, 1994.

+++ An unexpired order granting confidential treatment to deleted portions of
Exhibit 10.17 was issued on June 6, 1995.

++++ An unexpired order granting confidential treatment to deleted portions of
Exhibits 10.18 and 10.19 was issued on January 26, 1996.


                                       54
<PAGE>

SIGNATURES

Pursuant to the requirements to Section 13 of the Securities Exchange Act of
1934, the Registrant has duly caused this Annual Report on Form 10-K to be
signed on its behalf by the undersigned, thereunto duly authorized.

                               UroMed Corporation
Date:  March 30, 1998


                               By:     s/ Paul J. Murphy
                                    Chief Financial Officer and Treasurer

Pursuant to the requirements of the Securities Exchange Act of 1934, this Annual
Report on Form 10-K has been signed below as of March 30, 1998 by the following
persons on behalf of the Registrant and in the capacities indicated.

/s/ John G. Simon              Chairman of the Board, Chief Executive
-----------------              Officer and President (principal
                               executive officer)

/s/ Paul J. Murphy             Chief Financial Officer and Treasurer
------------------             (principal financial and accounting
                               officer)

/s/ Elizabeth B. Connell, MD   Director
----------------------------

/s/ David P. Fialkow           Director
--------------------

/s/ Steven J. Gilbert          Director
---------------------

/s/ Richard A. Sandberg        Director
-----------------------

/s/ Thomas F. Tierney          Director
---------------------

                                       55