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FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended: November 30, 2000
Commission File Number: 0-11411
Q-MED, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware 22-2468665
(State or other jurisdiction of (I.R.S Employer
incorporation or organization) Identification No.
100 Metro Park South, Laurence Harbor, New Jersey 08878
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (732) 566-2666
Securities registered pursuant to Section 12 (b) of the Act: None
Securities registered pursuant to Section 12 (g) of the Act: Common Stock, $.001
par value
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements by reference in Part III of this Form 10-K or any amendment to the
Form 10-K. [ ]
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
As of February 26, 2001, the aggregate value of the registrant's voting
stock held by non-affiliates was $66,977,771 (computed by multiplying the last
reported sale price on February 26, 2001 by the number of shares of common stock
held by persons other than officers, directors or by record holders of 10% or
more of the registrant's outstanding common stock. This characterization of
officers, directors and 10% or more beneficial owners as affiliates is for
purposes of computation only and is not an admission for any purposes that such
person are affiliates of the registrant).
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As of February 26, 2001, there were 13,008,154 shares of the
registrant's common stock, $.001 par value, issued and outstanding.
Documents incorporated by reference:
Document Form 10-K Reference
Portions of the Registrant's Annual Report to II
Stockholders (filed as an Exhibit hereto)
Portions of the Registrant's Proxy Statement III
for its 2001 Annual Meeting (to be filed in
definitive form within 120 days of the
Registrant's Fiscal Year End)
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PART I
ITEM 1. BUSINESS
Forward-Looking Statements
Certain matters discussed herein may constitute forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995 and as such may involve risks and uncertainties. In this report, the words
"anticipates," "believes," "expects," "intends," "future" and similar
expressions identify certain forward-looking statements. These forward-looking
statements relate to, among other things, expectations of the business
environment in which we operate, projections of future performance, perceived
opportunities in the market and statements regarding our mission and vision. Our
actual results, performance, or achievements may differ significantly from the
results, performance, or achievements expressed or implied in such
forward-looking statements. For discussion of the factors that might cause such
a difference, see "Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations."
General
Q-Med, Inc. (the "Company") is a Delaware corporation and is the
successor by merger to the business of a New Jersey corporation organized on
February 1, 1983. Interactive Heart Management Corp. ("IHMC"), a subsidiary
founded during the year ended November 30, 1995 ("fiscal 1995"), developed and
is marketing an integrated coronary artery disease management system under the
name "Ohms|CAD(R)" including related systems to assist health maintenance
organizations in managing the incidence, treatment, and cost of coronary artery
disease ("CAD"). These systems are designed to aid primary health care
physicians in the use of optimal medical management for those patients with
coronary disease as well as those at high risk of developing the disease. The
net impact of this approach is the improvement in coronary health and its
associated reduction in cost. Our system and services are uniquely suited to
assist primary health care physicians in discharging the greater medical
responsibilities that are expected to be placed on them, as the population ages
and as efforts are made to reduce the overall cost of health care.
This system consists of Monitor One STRx ambulant ischemic technology;
a remote on-line diagnostic center (The Ohms Center); and an integrated
cardiology consultant practice. This entire system noninvasively and reliably
quantifies the probable risk of a heart attack, unstable angina and death and
directs the patient to appropriate therapy with the emphasis throughout on early
detection, prevention of cardiac events, the modification of risk factors and
the appropriate medicine. Early detection and treatment with emphasis on medical
intervention results in an overall lowering of the cost of CAD care and the
improvement in patient health thereby reducing mortality and morbidity rates in
populations having CAD.
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We also produce, sell and support a line of ischemic heart monitors and
a system that analyzes heart rate variability under the name, Monitor One nDx(R)
("nDx"). Detecting the loss of variation in heart rate may assist the physician
in making a diagnosis and determining the severity of autonomic neuropathy.
Autonomic neuropathy, a deterioration of the autonomic nervous system, is
associated with diabetic patients and may lead to complications in the
functioning of the heart, respiratory systems, digestion, body temperature,
metabolism, perspiration and the secretion of certain endocrine glands.
Our executive offices are located at 100 Metro Park South, Laurence
Harbor, New Jersey 08878 and our telephone number is (732) 566-2666.
Ohms|CAD and Ohms|CVD(TM) Systems
Ohms|CAD is IHMC's proprietary "On-line Health Management Service for
Coronary Artery Disease". It is a medical "expert system" designed as a total
disease management process for CAD utilizing "best practice" solutions in the
management of disease. It consists of Monitor One STRx, IHMC's ambulant ischemia
technology, a remote on-line diagnostic center (The Ohms Center), and an
integrated cardiology consultant practice. The entire system noninvasively and
reliably quantifies the probable risk of a heart attack, unstable angina and
death, and rationally directs the patient to appropriate therapy with the accent
on early detection, the modification of critical risk factors and medical
intervention.
The system is an evidence based, relational mechanism, using coronary
artery disease patient descriptors which include:
o demographics,
o medical history,
o current medical therapy, including aspirin,
o lipid and hypertension profiles,
o obesity and life style,
o smoking,
o glucose levels, and
o ambulant ischemia
in its decision making. Recommendations for management are relational and
tailored to an individual patient. Significantly, each individual patient's
demographics and risk profiles are entered into the Ohms|CAD database for
primary and secondary prevention analysis and treatment.
Because of centralized, digital storage of all data, it allows for the
continuous description and analysis of quantifiable results:
o success of the stratification,
o proportion of patients assigned to various therapies,
o objective outcomes,
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o interplay with pharmaceutical and pharmacy benefit managers,
and
o physician and patient compliance
For example, in its risk prevention mode (myocardial infarction,
unstable angina, sudden death), it centers on the presence or absence of
ambulant ischemia as a risk stratifier utilizing our specialized noninvasive
STRx technology for evaluation of this phenomena in each patient. This test data
is telecommunicated to our Ohms|CAD database (The Ohms Center), which in turn
stratifies each individual patient into high or low risk. It then proposes to
lower patient risk with specific anti-ischemic medical therapies as one
treatment option, or, if necessary, recommends further local cardiology
consultation leading to possible invasive intervention. If the data indicate
that the patient is at low risk, a message is sent back to the primary care
physician site within minutes with recommendations for optimization of medical
therapy that will maintain the patient in the low risk pool. In both
circumstances, therapeutic actions are guided by IHMC's proprietary disease
management algorithm, which in turn is based on national practice guidelines.
All of the interactions and data are stored in the Ohms|CAD diagnostic center,
thus, outcome information is available continuously.
Because Ohms|CAD is an active disease management process emphasizing a
continuum of care, derived from early detection of ambulant ischemia and
modification of patient risk factors, similar cost-effective improvements in
cardiac events can be expected from its use. The Ohms|CAD system continuously
monitors the care process at the primary care level, and thus, results are
reported as outcomes. Favorable outcomes increase market share, decrease
economic risk and increase product differentiation for the managed care
organization. As a result, the early implementation of Ohms|CAD should
contribute to significant savings and patient gains in market share.
The Ohms|CAD system utilizes the Company's Monitor One system, which
utilizes technology detecting changes in the ECG signal which may be associated
with diseases of the heart. Our Monitor One may be worn on a belt or carried in
the patient's pocket, and is capable of interpreting a wide variety of ECG
signals which may be associated with cardiac conditions. Monitor One technology
has been independently validated in controlled research studies for the
detection of ischemic episodes associated with coronary ST-segment deviations in
patients with diagnosed CAD.
We are marketing a more comprehensive cardiovascular health management
system under the name Ohms|CVD. The Ohms|CVD system utilizes Ohms|CAD as its
core technology and adds the capability to manage patients that have suffered
congestive heart failure and the risk of stroke.
Medicare Award
We have been selected through a nationwide competitive process to
participate in the Medicare Coordinated Care Demonstration (MCCD). Our Ohms|CAD
program is the only one that will be evaluated specifically for management of
CAD.
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The Health Care Financing Administration (HCFA), which administers
Medicare, designed MCCD to evaluate the cost-effectiveness of reimbursing
disease management services in the Medicare fee for service model. In accordance
with the Balanced Budget Act of 1997, which mandated the demonstration, HCFA
"... may issue regulations to implement, on a permanent basis, the components of
the demonstration projects that are proven to be cost-effective for the Medicare
program".
Under the award, we will implement our Ohms|CVD preventative management
technology in a controlled randomized study of Medicare beneficiaries who have
been diagnosed previously with CAD. Patient enrollment, which will take place in
California, is expected to begin later in 2001 and we will receive fees from
HCFA for up to five years.
The MCCD was authorized by the Balanced Budget Act of 1997. It is
intended to test coordinating the care of Medicare beneficiaries with chronic
conditions that represent high costs to the Medicare program. Coordinated care
programs serving patients with chronic conditions were solicited and evaluated.
Conditions included heart disease, diabetes, liver and lung diseases, stroke and
other vascular disease, psychotic disorders, major depressive disorders,
drug/alcohol dependence, Alzheimer's or other dementia, cancer or HIV/AIDS.
Participant selection was made through a national competitive process.
Marketing
We directly market our Ohms|CAD service to health maintenance
organizations, large physician practice groups and similar managed care
organizations through our sales staff. Marketing efforts are conducted and
coordinated by our President, EVP of Sales, Marketing and Business Development
and other senior management personnel, with the aid, where appropriate, of
certain independent consultants. In addition, we generally pursue business
opportunities through the traditional competitive process where a Request for
Proposals ("RFP") or a Request for Qualifications ("RFQ") is issued by a managed
care, employer or government organization, to which a number of companies
respond. We utilize demographic and cost of service data from the organization
as well as statistical information to conduct an initial cost analysis to
determine program feasibility. As part of our sales efforts, management meets
with appropriate personnel from the organization making the request to best
determine the organization's needs. A typical RFP requires bidders to provide
detailed information, including the service to be provided by the bidder, its
experience and qualifications and the price at which the bidder is willing to
provide the services. We sometimes engage independent consultants to assist in
responding to RFPs. Based on the proposals received in response to an RFP, the
organization will award a contract to the successful bidder. In addition to
issuing formal RFPs, some organizations may issue an RFQ. In the RFQ process,
the requesting agency selects a firm believed to be most qualified to provide
the requested services and then negotiates the terms of the contract with that
firm, including the price at which its services are to be provided. We also
attend and promote our services at key conferences throughout the United States
where potential clients are present.
The marketing and sales of our devices to primary care physicians,
hospitals and other health care providers are primarily conducted through
distributors.
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Warranty
We extend end-users of purchased or leased devices a standard warranty
and, at additional cost to the end-user, extended one-year to three-year
warranties. Beginning in May, 1999 we changed our policy to extend only one year
warranties. Extended warranty sales represented 7.6%, 16.1% and 13.5% of net
sales for fiscal 2000, 1999 and 1998, respectively.
Principal Customers
During fiscal 2000 we had five major customers which accounted for
approximately 59% of total revenue. During fiscal 1999 and 1998 one customer
accounted for 21% and 15% of net sales respectively. The loss of any one
customer, each of whom has contracted for our services of a period of years, may
have an adverse affect on our future revenue.
Manufacturing
We contract with electronics companies for the manufacture and
sub-assembly of devices and accessories, used in our disease management systems
and provide these contractors with technical expertise. These devices undergo
final testing and packaging at our facility located in Sag Harbor, New York.
Although we have not experienced significant delays or disruptions in the
assembly and delivery of its products, there can be no assurance that delays or
disruptions will not occur in the future. A deterioration of our relationship
with our independent contract manufacturers could subject us to substantial
delays in the delivery of our products to customers. Such delays would subject
us to possible cancellation of orders and the loss of certain customers.
Whenever possible, we use multiple sources of supply for components.
However, we believe that there are only singular sources of supply for certain
components. There is no assurance that these sources will continue to supply
those parts and, if they become unavailable, we would be adversely affected.
Also, there can be no assurance that our contract manufacturers will maintain an
acceptable level of quality and capability for assembling the products to our
specifications. We have not experienced delays in obtaining supplies which
affected our ability to deliver finished goods.
Competition
We believe Ohms|CAD and Ohms|CVD offer unique solutions for coronary
disease management. However, there are several vendors, including pharmaceutical
companies, pharmacy benefit managers and independent companies that are pursuing
CAD management which we consider to be competition.
To our knowledge, none of these companies deal with CAD and related
diseases comprehensively. Most have designed their programs to respond to a
cardiac event, essentially waiting for a patient to have a heart attack or
procedure and to follow it with post-hospitalization case management. In
addition, manufacturers of drugs that reduce cholesterol have designed
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programs based on high blood lipids and have developed protocols emphasizing the
use of their drug(s). To our knowledge, Ohms|CAD is the only operating disease
management system that includes primary and secondary prevention; risk
stratifies the patients into those who are and who are not in danger of adverse
events in the near term; and reduces practice variation and referrals. No other
CAD management program has shown comparable results with beneficial patient
outcomes that lowered overall CAD health care costs.
We believe we have competitive advantages based on the following:
o The entire management system and its components are
proprietary and patented: STRx is covered by U.S. Pat.
#4679144 and Ohms|CAD by U.S. Pat. #5724580.
o Clinically validated digital ischemia technology.
o Documented outcomes presented at American Heart Association
Scientific Sessions.
o Extensive and growing database of how specific therapeutic
modalities affect patients.
o Proven success in implementing a CAD disease management system
in the field that leads to a faster rollout and faster health
and economic outcomes to the plan.
o Proprietary analytics that define the target population at
risk.
o Established infrastructure with integrated resources and
processes amplified by corporate expertise.
Competition may increase and such competition could come from companies
that are considerably larger and have greater financial and marketing resources
than we have.
Monitor One(R) ischemia products compete primarily with ambulatory
arrhythmia ECG scanning services, of which there are more than 75 in the United
States, and other ambulatory ECG monitoring equipment manufacturers. In many
cases, some of these companies have substantially greater marketing, financial
and other resources than we have, but management believes that our products'
price and performance are competitive in this field.
We are not aware of any commercial product competing with our nDx
system, a system which automates the process of testing for autonomic
dysfunction. Nor are we aware of any comprehensive CAD management system which
competes with Ohms|CAD.
We believe that direct competition in ambulatory ischemic monitors;
products for testing autonomic function; and interpretive ECG may, in the
future, come from companies that are considerably larger and have greater
financial and human resources and marketing capabilities. Primary competitive
factors in the medical device industry include scientific and technological
8
superiority, price, service, product support, availability of patent protection,
access to adequate capital, the ability to successfully develop and market
products and processes.
Research and Development
In fiscal 2000, 1999 and 1998, we expended $524,275, $571,449 and
$486,843 respectively, for research and development. During these years,
research and development was primarily focused on the development of an advanced
version of the Ohms|CAD system.
Management expects to continue to develop new products, as well as
enhance its existing products and has budgeted approximately 8% of anticipated
revenue for such product development in fiscal 2001.
Patent Protection and Proprietary Information
We maintain a policy of seeking patent protection in the United States
and other countries in connection with certain elements of its technology. Our
Monitor One technology has been granted patents in the United States (Patent No.
4679144), Canada (No. 1281081) and Spain (No. 547040) and has additional patent
applications pending in other countries. We received a U.S. patent for the nDx
technology on March 29, 1994 (Patent No. 5299119) and a patent for the Ohms|CAD
system (Patent No. 5,724,580) on March 3, 1998. Certain patents relating to our
technology begin expiring in 2004.
The patent laws of foreign countries may differ from those of the
United States as to the patentibility of our products and, accordingly the
degree of protection afforded by the pendency or issuance of foreign patents may
be different than the protection afforded under associated United States
patents. There can be no assurance that patents will be obtained in foreign
jurisdictions with respect to our products or that the United States patent and
any foreign patents will significantly protect or be commercially beneficial.
We do not intend to rely solely on patent protection for our
proprietary technology. We also rely upon confidentiality agreements with
employees, know-how, expertise and lead-time to attain and maintain our
competitive position. To the extent that we rely upon these measures, there can
be no assurance that others might not independently develop similar technology
or that secrecy will not be breached.
Privacy Issues
Because our applications and services are utilized to transmit and
manage highly sensitive and confidential health information, we must address the
security and confidentiality concerns of our customers and their patients. To
enable the use of our applications and services for the transmission of
sensitive and confidential medical information, we utilize advanced technology
designed to ensure a high degree of security. This technology generally
includes:
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o Security that requires a password to access our systems;
o User access restrictions that allow our customers to determine
the individuals who will have access to data and what level of
access each individual will have;
o Encryption of data relating to our applications and services;
and
o A mechanism for preventing outsiders from improperly accessing
private data resources on our internal network and our
applications, commonly referred to as a "firewall."
The level of data encryption utilized by our products is in compliance
with the encryption guidelines set forth in the proposed rule regarding security
and electronic signature standards in connection with Health Insurance
Portability and Accountability Act of 1996. Our customers also implement their
own procedures to protect the confidentiality of information being transferred
into and out of their computer network.
Internally, we work to ensure the safe handling of confidential data by
employees by:
o Using individual user names and passwords for each employee
handling electronic data; and
o Requiring each employee to sign an agreement to comply with
all company policies, including our policy regarding handling
confidential information.
We monitor proposed regulations that might affect our applications and
services, in order to ensure that we are in compliance with such regulations
when and if they are effected.
Government Regulation
HEALTHCARE REGULATION. As a participant in the health care industry,
our operations and relationships are subject to regulation by federal and state
laws and regulations and enforcement by federal and state governmental agencies.
Sanctions may be imposed for violation of these laws. We believe our operations
are in substantial compliance with existing laws that are material to our
operations.
HIPAA. The Health Insurance Portability and Accountability Act of 1996,
known as HIPAA, required the Secretary of the Department of Health and Human
Services, referred to as the Secretary, to promulgate national standards to
facilitate the electronic exchange of health information and to ensure the
confidentiality and security of such information.
A substantial part of our activities involves the receipt or delivery
of confidential health information concerning members of managed care
organizations with whom we have direct
10
relationships. For example, we transfer confidential health information to
providers and managed care organizations in connection with our Ohms|CAD
programs. On December 28, 2000, the Secretary published a final rule setting
standards to limit the permissible use and disclosure of individually
identifiable health information by health care providers, health plans and
health care clearinghouses, known collectively as "covered entities." Certain
requirements of the rule extend to "business associates" of the covered
entities. The covered entities are required to enter into agreements with their
business associates, extending applicable provisions of the rule to those
business associates. The covered entities are responsible for enforcing those
contractual provisions. The Secretary's actions are mandated by HIPAA because
Congress did not pass legislation protecting health information privacy by the
August 1999 deadline set by HIPAA. While this final rule was withdrawn by the
Secretary on February 23, 2001 and will be again subject to public comment, it
is the Secretary's stated intention to act as quickly as possible to implement
new standards.
Because of the broad definition of "business associates" under the
rescinded final privacy rule, we would have been, at a minimum, considered to be
business associates of covered entities. The rule established a complex
regulatory framework on a variety of subjects, including (1) disclosure and use
of health information, (2) individuals rights to access and amend their health
information, (3) individuals rights to an accounting of disclosures and (4)
administrative, technical and physical safeguards required of covered entities
that maintain or transmit protected health information. That rescinded rule
generally prohibited any disclosure or use of protected health information
except as authorized either by the rule or by the patient under standards set by
the final rule. There is no guarantee that the rules which will eventually be
promulgated will be less burdensome.
In addition to the federal privacy rule described above, most states
have enacted patient confidentiality laws, which prohibit the disclosure of
confidential medical information. The federal privacy rule would have
established minimum standards and would have preempted conflicting state laws,
less restrictive than HIPAA regarding health information privacy. But they would
not have preempted conflicting state laws more restrictive than HIPAA. The rules
provided that covered entities comply with the health information privacy
standards within two years after their effective date of the final rule, or
February 26, 2003 in the case of most covered entities. The rule to be
promulgated by the Secretary may require substantial changes to our applications
and services, policies and procedures.
In addition to the federal privacy rule, on August 12, 1998 the
Secretary issued proposed regulations addressing security standards regarding
the transmission of health information data under HIPAA. The security standards
address various areas, including, administrative procedures, physical
safeguards, technical security services and technical security mechanisms.
Security standards may require us to enter into agreements with certain of our
customers restricting the dissemination of health information and requiring
implementation of specified security measures. Final regulations are expected at
an undetermined date and will require compliance two years after the effective
date of the final rule. Although we are working to design our applications and
services to comply with the proposed security standards, there can be no
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assurance that final security regulations will not require additional
modifications to our applications, policies and procedures.
FDA REGULATION. The Food and Drug Administration, or FDA, generally has
the authority to regulate medical devices, including computer applications, when
devices are indicated, labeled or intended to be used in the diagnosis of
disease or other conditions, or in the cure, mitigation, treatment or prevention
of disease, or are intended to affect the structure or function of the body. We
do not believe that any of our current services are subject to FDA regulation as
medical devices, however, expansion of our application and service offerings
could subject us to FDA regulation.
Our products, to the extent they may be deemed "medical devices," are
regulated by the FDA under the Federal Food, Drug and Cosmetics Act (the "FDCA")
and regulations promulgated thereunder.
All medical devices sold in interstate commerce are subject to FDA
clearance. Our monitors are subject to pre-market notification (510(k)),
pursuant to which the FDA determines whether a new medical product is
"substantially equivalent" to a product that was on the market prior to May 28,
1976. Products found to be "substantially equivalent" to those products may
thereafter be sold. The FDA has the authority, which it has not yet exercised,
to issue performance standards for the type of monitors manufactured by us.
Regulations by the FDA, known as Good Manufacturing Practices ("GMP"),
provide standards for manufacturing processes, facilities, and record-keeping
requirements with which we and our contract manufacturers must also comply. We
believe that the manufacturing and quality control procedures employed by it and
its contract manufacturers meet the GMP requirements. If the FDA should
determine that our monitors were not manufactured in accordance with GMP's, it
has the authority to order us to cease production and may require us to recall
products already sold by us. In addition, any facilities used to manufacture or
assemble our products will be subject to inspection by the FDA at least
biannually.
The FDCA is not the exclusive source of regulation of medical devices
and, by its terms, allows state and local authorities to adopt more stringent
regulations for medical devices.
REGULATION OF THE INTERNET. Laws and regulations applicable to
communications or commerce over the Internet may be adopted covering user
privacy, pricing, content, copyright, distribution and characteristics and
quality of products and services. In addition, some states or foreign countries
could apply existing laws concerning issues such as property ownership, sales
tax, libel and personal privacy to transactions conducted over the Internet.
Additional laws or regulations or application of laws to transactions over the
Internet could require us to change our operations or increase our cost of doing
business.
To our knowledge and other than what we have described in this
statement and other than occupational health and safety laws and labor laws
which are generally applicable to most companies, our products are not subject
to governmental regulation by any federal, state or local
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agencies that would affect the manufacture, sale or use of our products. We
cannot, of course, predict what sort of regulations of this type may be imposed
in the future, but we do not anticipate any unusual difficulties in complying
with governmental regulations that may be adopted in the future.
Employees
We, as of January 31, 2001, had 50 full time employees. Of these full
time employees, 5 were executives, 6 were engaged in supervisory capacities, 4
in sales 6 in product development, 7 on-site coordinators, 6 medical
technicians, 3 data analysts, 3 in systems administration and 10 in office
administration. The Company also employs approximately 12 part time employees
with various duties primarily related to the Ohms|CAD system. None of our
employees are covered by a collective bargaining agreement. We believe our
relations with employees are good.
Item 2. Properties.
Our executive offices occupy approximately 9,000 square feet of office
space in Laurence Harbor, New Jersey. These facilities are used principally for
administrative offices, sales training, and marketing. In addition, we lease
approximately 2,000 square feet of space in Sag Harbor, New York used
principally for monitor repairs, assembly and quality control. The Company also
entered into a lease for approximately 820 square feet in California to be used
primarily for sales support. Management believes that the foregoing facilities
are adequate for our current level of operations.
Item 3. Legal Proceedings.
We are subject to claims and legal proceedings covering a wide range of
matters that arise in the ordinary course of business. It is management's
opinion that the ultimate resolution of these matters will not have a material
effect on our consolidated financial position and results of operations.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
13
PART II
Item 5. Market for the Registrant's Common Stock and Related Security Holder
Matters.
Market for the Registrant's Common Stock and related stockholder
matters as set forth on page 28 of the Registrant's 2000 Annual Report to
Stockholders is incorporated herein by reference.
Item 6. Selected Financial Data.
Selected financial data as set forth on page 7 of the Registrant's 2000
Annual Report to Stockholders is incorporated herein by reference.
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Management's discussion and analysis of financial condition and results
of operations as set forth on pages 8 to 13 of the Registrant's 2000 Annual
Report to Stockholders is incorporated herein by reference.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk.
Quantitative and qualitative disclosures about market risk as set forth
on page 19, Note 2 of the Registrant's 2000 Annual Report to Stockholders is
incorporated herein by reference.
Item 8. Financial Statements and Supplementary Data.
Financial statements and supplementary data as set forth on pages 14 to
27 of the Registrant's 2000 Annual Report to Stockholders is incorporated herein
by reference.
Item 9. Disagreements on Accounting and Financial Disclosure.
None.
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PART III
Item 10. Directors, Executive Officers, Promoters, Control Persons and
Compliance with Section 16(a) of the Exchange Act of the Registrant.
Information with respect to executive officers and directors of the
Company will be set forth in the Company's definitive proxy statement which is
expected to be filed within 120 days of November 30, 2000 and is incorporated
herein by reference.
Item 11. Executive Compensation.
Information with respect to executive compensation will be set forth in
the Company's definitive proxy statement which is expected to be filed within
120 days of November 30, 2000 and is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
Information with respect to the ownership of the Company's securities
by certain persons will be set forth in the Company's definitive proxy statement
which is expected to be filed within 120 days of November 30, 2000 and is
incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions.
Information with respect to transactions with management and others
will be set forth in the Company's definitive proxy statement which is expected
to be filed within 120 days of November 30, 2000 and is incorporated herein by
reference.
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PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.
(a) (1) Financial Statements.
Description
-----------
Independent Auditors Report
Consolidated Balance Sheets as of November 30, 2000
and 1999
Consolidated Statement of Operations for each of the
three years ended November 30, 2000, 1999 and 1998
Consolidated Statement of Stockholder's Equity for each
of the three years ended November 30, 2000, 1999 and 1998
Consolidated Statement of Cash Flow for each of the
three years ended November 30, 2000, 1999 and 1998
Notes to Consolidated Financial Statements
(2) Financial Statement Schedules
Schedules have been omitted because they are not applicable.
(b) Reports on Form 8-K.
None.
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(c) The following Exhibits are filed as part of this report. Where such
filing is made by incorporation by reference (I/B/R) to a previously filed
statement or report, such statement or report is identified in parentheses:
Official Sequential
Exhibit No. Description Page No.
- ----------- ----------- --------
2 None
3.1 Amended and restated New Jersey Certificate of
Incorporation dated July 6, 1983 (Exhibit 3C to
the S-18 Registration Statement 2-86653-NY of the
Company effective December 1, 1983) I/B/R
3.2 New Jersey By-Laws as amended on January 16, 1984
(Exhibit 3F to the Company's Annual Report on Form
10-K for the year ending November 30, 1984) I/B/R
3.3 Amended and Restated Delaware Certificate of
Incorporation of Q-Med, Inc. as in effect on July
11, 1987 (Exhibit 3.3 to the Company's Report on
Form 10-Q dated May 31, 1987) I/B/R
3.4 By-Laws as in effect on July 1, 1987 (Exhibit 3.3
to the Company's Report on Form 10-Q dated May 31,
1987) I/B/R
3.5 Amendment to By-Laws dated December 18, 1997
Exhibit 3.5 to the Company's Form 10-K Report
dated November 30, 1997) I/B/R
4.1 Specimen of Stock Certificate (Exhibit 4.1 to the
Company's Report on Form 10-K dated November 30,
1989) I/B/R
4.2 Registration Rights Agreement between Q-Med, Inc.
and Galen Partners III, L.P., Galen Partners
International III, L.P., and Galen Employee Fund
III, L.P. dated as of December 18, 1997 (Exhibit
4.3 to the Company's report on Form 8-K dated
December 18, 1997) I/B/R
17
4.3 Form of Warrant Agreement dated November 16, 1998
(Exhibit 99.6 to the Company's report on Form 8-K
dated November 16, 1998) I/B/R
4.4 Form of common stock purchase warrants exercisable
at $1.67 per share until November 15, 2005 (Exhibit
4.1 to the Company's report on Form 8-K dated May
17, 1999) I/B/R
4.5 Form of common stock purchase warrants exercisable
at $2.87 per share until November 15, 2005 (Exhibit
4.2 to the Company's report on Form 8-K dated May
17, 1999) I/B/R
4.6 Form of common stock purchase warrants exercisable
at $2.625 per share until November 15, 2005 (Exhibit
4.2 to the Company's report on Form 8-K dated August
25, 1999) I/B/R
9.1 Form of Shareholder and Voting Rights Agreement
between the Company and several stockholders dated
as of November 16, 1998 (Exhibit 99.4 to the Company's
report on Form 8-K dated November 16, 1998) I/B/R
10.1 Q-Med, Inc. 1986 Incentive Stock Option Plan
(Exhibit 10N to the Company's Registration
Statement No. 33-4499 on Form S-1) I/B/R
10.2 Lease dated August 31, 1993 between the Company
and Alexandria Atrium Associates (Exhibit 28.1 to
the Company's Form 10-QSB Report dated August 31,
1993) I/B/R
10.3 Registration Rights Agreement dated May 6, 1996
between Q-Med, Inc. and S.R. One Limited (Exhibit
10.10 to the Company's Form 10-K Report dated
November 30, 1996, as amended) I/B/R
10.4 Q-Med, Inc. 1997 Equity Incentive Plan (Exhibit 10.11
to the Company's Form 10-K Report dated November
30, 1998) I/B/R
18
10.5 Amendment dated as of November 15, 1998 to Note
Purchase Agreement between Q-Med, Inc. and Galen
Partners III, L.P., Galen Partners International
III, L.P., Galen Employee Fund III, L.P. dated as
of December 18, 1997 (Exhibit 99.1 to the
Company's report on Form 8-K dated November 16,
1998) I/B/R
10.6 Form of Registration Rights Agreement between
Q-Med, Inc. and several stockholders dated as of
November 15, 1998 (Exhibit 99.3 to the Company's
report on Form 8-K dated November 16, 1998) I/B/R
10.7 Form of Option Agreement between the Company and
several stockholders dated as of November 16, 1998
(Exhibit 99.5 to the Company's report on Form 8-K
dated November 15, 1998) I/B/R
10.8 Amendment dated December 16, 1998 to Employment
Agreement between the Company and Michael W. Cox
(Exhibit 10.11 to the Company's Form 10-K for year
ended November 30, 1998) I/B/R
10.9 Amendment of option agreement dated May 17, 1999
(Exhibit 99.1 to the Company's report on Form 8-K
dated May 17, 1999) I/B/R
10.10 Securities Purchase Agreement between Q-Med, Inc.
and Galen Partners III, L.P., Galen Partners
International III, L.P., Galen Employee Fund III,
L.P. dated as of August 25, 1999 (Exhibit 99.2 to
the Company's report on Form 8-K dated August 25,
1999) I/B/R
10.11 Q-Med, Inc. 1999 Equity Incentive Plan (Exhibit 4.1
to the Company's Registration Statement on Form
S-8 (333-93697) filed December 28, 1999) I/B/R
10.12 Employment Agreement dated May 12, 2000 between
Gary A. Levin M.D. and Interactive Heart
Management Corp. (Exhibit 10.1 to the Company's
Form 10-Q Report dated May 31, 2000) I/B/R
10.13 Limited Liability Agreement of HeartMasters LLC
dated April 14, 2000 (Exhibit 99.1 to the Company's
Form 10-Q Report dated May 31, 2000) I/B/R
19
10.14 Trademark and Data License and Services Agreement
between Interactive Heart Management Corp. and
HeartMasters, LLC dated April 14, 2000 (Exhibit
99.2 to the Company's Form 10-Q Report dated May
31, 2000) I/B/R
11 None
13* Q-Med, Inc. 2000 Annual Report.
16 None.
18 None.
21* Subsidiaries of Registrant
22 None.
23* Consent of Amper, Politziner & Mattia P.A.
24 None.
- ---------
* Filed herewith
20
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed by
the undersigned, thereunto duly authorized.
Dated: February 28, 2001 Q-MED, INC.
By: /s/ Michael W. Cox
------------------
Michael W. Cox, President
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed on behalf of the Registrant and in capacities and at
the dates indicated:
Signature Capacity Date
--------- -------- ----
/s/ Michael W. Cox President and Treasurer February 28, 2001
- --------------------------- (Principal Executive and
Michael W. Cox Financial Officer)
/s/ Richard I. Levin Director February 28, 2001
- ---------------------------
Richard I. Levin
/s/ Robert A. Burns Director February 28, 2001
- ---------------------------
Robert A. Burns
/s/ David Feldman Director February 28, 2001
- ---------------------------
David Feldman
/s/ Herbert H. Sommer Director February 28, 2001
- ---------------------------
Herbert H. Sommer
/s/ A. Bruce Campbell Director February 28, 2001
- ---------------------------
A. Bruce Campbell
/s/ Debra A. Fenton Controller February 28, 2001
- ---------------------------
Debra A. Fenton
21
EXHIBIT INDEX
Exhibit Sequential
No. Page No.
- ------- -----------
13 Q-Med, Inc. 2000 Annual Report
21 Subsidiaries of Registrant
23 Consent of Amper, Politziner & Mattia P.A.
22