<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
/X/ Quarterly Report Pursuant to Section 13 or 15 (d) of the Securities
Exchange Act of 1934
For the Quarterly Period Ended: September 30, 1996 or
/ / Transition Report Pursuant to Section 13 or 15 (d) of the Securities
Exchange Act of 1934
For the Period from __________ to __________
Commission File Number: 0-6333
HYDRON TECHNOLOGIES, INC.
------------------------------------------------------
(Exact name of Registrant as specified in its charter)
New York 13-1574215
- ------------------------------- ---------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
1001 Yamato Road, Suite 403
Boca Raton, Florida 33431 (561) 994-6191
- ---------------------------------------- -------------------------------
(Address of Principal Executive Offices) (Registrant's telephone number)
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 report), and (2) has been subject to such
filing requirements for the past 90 days. X Yes No.
----- -----
Number of shares of common stock outstanding as of November 12, 1996: 23,228,511
Page 1 of 4
<PAGE>
HYDRON TECHNOLOGIES, INC. AND SUBSIDIARIES
Index
Part I. Financial Information
Item 1. Financial Statements (Unaudited)
Condensed consolidated balance sheets -- September 30, 1996 and
December 31, 1995
Condensed consolidated statements of operations -- Three months ended
September 30, 1996 and 1995; Nine months ended September 30, 1996 and
1995
Condensed consolidated statements of cash flows-- Nine months ended
September 30, 1996 and 1995
Notes to condensed consolidated financial statements -- September 30, 1996
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Part II. Other Information
Item 4. Submission of Matters to a Vote of Security Holders
Item 6. Exhibits and Reports on Form 8-K
Signatures
Page 2 of 14
<PAGE>
HYDRON TECHNOLOGIES, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
<TABLE>
<CAPTION>
September 30, 1996 Dec. 31, 1995
---------------------------------------
<S> <C> <C>
ASSETS (Unaudited) (Note)
Current assets:
Cash and cash equivalents $ 6,505,324 $ 4,346,587
Trade accounts receivable 1,240,330 1,002,969
Inventories 2,988,039 3,998,304
Prepaid expenses and other
current assets 251,903 130,907
------------ ------------
Total current assets 10,985,596 9,478,767
Property and equipment, net 529,328 620,317
Investment in joint venture 290,731 221,366
Deferred product costs, less
accumulated amortization of
$3,928,532 and $3,697,400 at
1996 and 1995, respectively 2,039,264 2,264,061
Deposits 404,894 407,600
------------ ------------
$ 14,249,813 $ 12,992,111
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 469,364 $ 235,645
Accrued liabilities 309,747 194,918
------------ ------------
Total current liabilities 779,111 430,563
Stockholders' equity:
Common stock -- $.01 par value;
30,000,000 shares authorized;
23,206,698 and 22,639,816
shares issued and outstanding
at 1996 and 1995, respectively 232,067 226,398
Additional paid-in capital 20,878,054 18,113,632
Accumulated deficit (7,639,419) (5,778,482)
------------ ------------
Total stockholders' equity 13,470,702 12,561,548
------------ ------------
$ 14,249,813 $ 12,992,111
============ ============
</TABLE>
Note: The balance sheet at December 31, 1995 has been derived from the audited
financial statements at that date but does not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements.
See notes to condensed consolidated financial statements.
Page 3 of 14
<PAGE>
HYDRON TECHNOLOGIES, INC. AND SUBSIDIARIES
Condensed Consolidated Statements Of Operations
(Unaudited)
Three Months and Nine Months Ended September 30, 1996 and 1995
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net sales $ 2,003,192 $ 1,672,194 $ 7,036,833 $ 5,725,798
Cost of sales 848,395 603,546 2,856,261 2,051,597
------------ ------------ ------------ ------------
Gross profit 1,154,797 1,068,648 4,180,572 3,674,201
------------ ------------ ------------ ------------
Expenses:
Royalty expense 93,114 78,890 331,162 262,065
Research and
development 128,825 26,151 382,886 146,704
Selling, general
& administrative 719,919 543,763 1,975,115 1,448,673
Distribution Agree-
ment expense 3,145,305 -- 3,145,305 --
Depreciation &
amortization 107,092 85,511 321,277 256,278
------------ ------------ ------------ ------------
4,194,255 734,315 6,155,745 2,113,720
------------ ------------ ------------ ------------
Operating income (3,039,458) 334,333 (1,975,173) 1,560,481
Interest income 86,635 71,475 223,538 249,992
Infomercial pick-up 13,017 -- (83,302) --
------------ ------------ ------------ ------------
(Loss) Income before
income taxes (2,939,806) 405,808 (1,834,937) 1,810,473
Income tax expense 4,000 30,000 26,000 30,000
------------ ------------ ------------ ------------
Net (loss) income $ (2,943,806) $ 375,808 $ (1,860,937) $ 1,780,473
============ ============ ============ ============
Net income per common share:
Primary (.12) .02 (.08) .08
Fully Diluted (.12) .02 (.08) .08
Weighted average number of
common shares outstanding:
Primary 24,217,630 23,142,657 23,292,152 23,148,411
Fully Diluted 24,217,630 23,142,657 24,217,630 23,165,370
</TABLE>
See notes to condensed consolidated financial statements.
Page 4 of 14
<PAGE>
HYDRON TECHNOLOGIES, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Nine Months Ended September 30, 1996 and 1995
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Operating activities:
Net cash provided by
operating activities $ 2,777,134 $ 1,346,033
----------- -----------
Investing activities:
Capital expenditures, net 844 (268,647)
Investment in joint venture (152,667) (200,000)
Increase in deferred product costs (6,335) (545)
----------- -----------
Net cash used in
investing activities (158,158) (469,192)
----------- -----------
Financing activities:
Proceeds from issuance
of common stock, net 1,253,000 28,875
Cash dividends paid (1,713,239) (1,697,377)
----------- -----------
Net cash used in
financing activities (460,239) (1,668,502)
----------- -----------
Net increase (decrease) in cash
and cash equivalents 2,158,737 (791,661)
Cash and cash equivalents at
beginning of period 4,346,587 5,723,664
----------- -----------
Cash and cash equivalents at
end of period $ 6,505,324 $ 4,932,003
=========== ===========
</TABLE>
See notes to condensed consolidated financial statements.
Page 5 of 14
<PAGE>
HYDRON TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
September 30, 1996
Note A -- Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary for
a fair presentation have been included. Operating results for the three- and
nine-month periods ended September 30, 1996 are not necessarily indicative of
the results that may be expected for the year ending December 31, 1996. For
further information, refer to the consolidated financial statements and
footnotes thereto included in the Registrant and Subsidiaries' annual report on
Form 10-K for the year ended December 31, 1995.
Note B -- Inventories
Inventories consist of the following:
September 30, 1996 December 31, 1995
------------------------------------------
Finished goods $ 1,874,154 $ 3,044,890
Work in progress 130,539 162,794
Raw materials and components 983,346 790,620
----------- -----------
$ 2,988,039 $ 3,998,304
=========== ===========
Note C -- Investment in Joint Venture
On January 17, 1995, Hydron Technologies, Inc. ("HyTech") entered into an
agreement with two other companies to form a joint venture known as
Hydromercial Partners (the "Joint Venture"). Each company has a one-third
interest in the profits and losses of the Joint Venture, which has an initial
term of two (2) years, subject to renewal on an annual basis thereafter upon
unanimous consent of all of the Joint Venture participants. The purpose of the
Joint Venture is to provide and sell HyTech's polymer-based skin care line by
means of a thirty (30) minute commercial ("Infomercial") which the Joint
Venture has produced. On July 19, 1996, as part of the Amended License
Agreement with QVC, the Joint Venture was dissolved (effective May 31, 1996)
and a new partnership was created, known as New Hydromercial Partners
("Partnership"). The Partnership is an equal partnership between HyTech and QVC
to promote Hydron products through an Infomercial. (See Note D)
Page 6 of 14
<PAGE>
HYDRON TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Unaudited)
September 30, 1996
Note D - Distribution Agreement
On July 19, 1996, HyTech and QVC amended their existing marketing and
distribution license to provide HyTech with certain retail marketing rights and
to significantly increase the minimum product purchase requirements QVC must
meet, on a bi-annual basis, to maintain its exclusive rights to market Hydron
consumer products through direct response television in North, South and
Central America. The Amended License Agreement will allow QVC to promote Hydron
products in a manner consistent with which it promotes its proprietary brands
and also creates a new, equal partnership between QDirect Ventures, Inc., an
affiliate of QVC, and Hydron Direct, Inc., a wholly-owned subsidiary of HyTech,
to promote Hydron products through an infomercial. This new partnership
replaces the previous Hydromercial Partners Joint Venture. The Amended License
Agreement provides that certain retail marketing rights formerly held by Direct
to Retail (QVC granted these rights to DTR under a separate agreement), revert
back to HyTech and that QVC will no longer pay a royalty on retail sales of
Hydron products to DTR. The retail marketing rights include prestige retail
channels of distribution such as traditional department and specialty stores,
boutique stores and beauty salons, as well as catalog sales. QVC will receive a
commission from HyTech on these sales. Also concurrent with the execution of
the Amended License Agreement, and as part of the overall transaction, HyTech
has granted DTR an option to purchase 1.5 million shares of the company's
common stock at $.01 per share. As a result, HyTech will incurred a one-time
non-cash charge against earnings of approximately $3.145 million in the third
quarter ended September 30, 1996, which had no effect on the company's net
shareholders' equity. Also, QVC has exercised options to purchase 500,000
shares of HyTech's common stock, at $2.50 per share, and paid HyTech $1.25
million. HyTech also granted to QVC an option to purchase an additional 500,000
shares at $2.75 per share. Both QVC and DTR have agreed to standstill
provisions not to purchase additional shares of HyTech's stock without the
company's permission and DTR has given its proxy for its shares to Harvey
Tauman, HyTech's president, for as long as DTR holds them.
Discounting the effect of the expenses associated with the Amended License
Agreement, HyTech would have reported net income of $201,499, or $.01 per
share, and $1,284,368, or $.05 per share, for the three (3) and nine (9) months
ended September 30, 1996, respectively.
Note E - Income Taxes
The tax provisions for the three (3) month and the nine (9) month periods ended
September 30, 1996 and 1995 represent the Alternative Minimum Tax due after
utilization of the available net operating loss carryforwards.
Page 7 of 14
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Business
Hydron Technologies, Inc. ("HyTech") is the owner of a broad range of consumer
and oral health care products using Hydron(R) polymers, a scientifically-proven
moisture attracting ingredient, and also owns a non-prescription drug delivery
system for topically applied pharmaceuticals, which uses the polymer. HyTech
holds U.S. and international patents on the only known means to suspend the
Hydron polymer in a stable emulsion that is cosmetically acceptable for use in
personal care/cosmetic products, creating a new moisturizing technology for the
personal care/cosmetics and pharmaceutical industries. HyTech sells specialty
personal care/cosmetic products, and to a lesser extent oral health care
products, most of which are covered by patent, license and royalty agreements.
HyTech has entered into a License Agreement with QVC, Inc., as amended (the
"Amended QVC License Agreement"), which gives the electronic retailer certain
exclusive rights to purchase licensed products from HyTech for sale in the
Western Hemisphere, and a License Agreement with National Patent Development
Corp., which provides that HyTech will generally pay royalties to National
Patent on its sales and receive royalties from National Patent from sales of
certain of that company's products. HyTech is developing other personal
care/cosmetics and oral health care products using Hydron polymers, as well as
products that use Hydron polymer technology as a drug delivery system, which
HyTech intends to market through third parties or its own efforts.
Results of Operations
Net sales for the three (3) months ended September 30, 1996 were $2,003,192, or
20% higher than net sales of $1,672,194 for the corresponding period of the
fiscal year ended December 31, 1995 ("Fiscal 1995"). Net sales for the nine (9)
months ended September 30, 1996 were $7,036,833, or 23% percent higher than net
sales of $5,725,798 for the corresponding period of Fiscal 1995. These
increases are the result of QVC purchasing patterns, which are affected
primarily by the timing of on-air programming, and do not necessarily mirror
retail sales by QVC to consumers.
As of December 31, 1994, QVC held approximately $1.8 million more of HyTech's
products in inventory, at QVC's cost, than it held in inventory at December 31,
1995. QVC's small inventory position at the beginning of Fiscal 1996
necessitated additional purchases from HyTech for the 17 hours of on-air
programming in the first nine months of Fiscal 1996. However, due to reduced
airtime (23 hours of programming in the corresponding period of Fiscal 1995),
on-air retail sales of HyTech's products by QVC to consumers were lower in the
first nine months of Fiscal 1996 than in the first nine months of Fiscal 1995.
Notwithstanding the reduced airtime, back-end sales (which consist primarily of
reorders) of HyTech's products by QVC to consumers increased over the same
period.
Page 8 of 14
<PAGE>
Results of Operations (continued)
As previously discussed, the Amended License Agreement, which was signed on
July 19, 1996, provides HyTech with certain retail marketing rights to its
Hydron brand product lines, (i.e., traditional department stores, specialty
stores, boutiques and beauty salons), as well as catalog sales. The Amended
License Agreement also permits QVC to maintain its exclusive rights to market
Hydron brand consumer products within North, South and Central America through
direct response television, if QVC purchases certain escalating minimum
quantities of product over a two-year term ending May 31, 1998. In return for
these significantly higher minimum product purchase requirements, HyTech has
decreased the prices at which it sells Hydron brand consumer products to QVC,
which is expected to decrease HyTech's gross profit margin by less than 5%.
Products sold to QVC or its affiliates for resale through infomercials, or
outside the Western Hemisphere, are excluded from the calculation of such
minimum purchase levels. QVC has no obligation to purchase Hydron brand
consumer products except to maintain exclusivity under the Amended License
Agreement, which renews automatically for additional two-year terms as long as
the minimum purchase levels are met. No assurances can be given that QVC will
meet such escalating minimum purchase levels.
Based on discussions with QVC, management expects substantially more airtime in
the final quarter of Fiscal 1996 and in Fiscal 1997 than in comparable periods
of Fiscal 1995 and Fiscal 1996. Management is also currently in discussions
with QVC to increase on-air programming by focusing primarily on new program
formats, line extensions and special promotions. However, no assurances can be
given that QVC will grant HyTech additional on-air selling time; failure to
receive such additional on-air selling time could negatively impact sales.
Substantially all of the sales during the relevant periods were to QVC and its
related entities. Absent the consummation of marketing or distribution
arrangements with third parties other than QVC, the percentage of sales to QVC
and HyTech's dependence upon QVC as a substantial customer will remain
significant.
HyTech's gross profit margin for the three (3) months ended September 30, 1996
decreased six (6) percentage points to 58% from 64% for the corresponding
period of Fiscal 1995. The gross profit margin for the nine (9) months ended
September 30, 1996 decreased five (5) percentage points to 59% from 64%. These
decreases were due primarily to fluctuations in the mix of products sold to QVC
in those periods and to lower prices at which products were sold to QVC under
the Amended License Agreement. In June 1995, HyTech re-packaged eight (8) of
its individual skin care products in a single collection to encourage wider
consumer usage. Management believes that this slightly lower margin item
generally expands potential re-order business, and leads to increased sales of
the individual products at higher margins. This marketing strategy is a
concerted effort by management to further increase the number of consumers
using HyTech's products, as well as to broaden distribution of the complete
Hydron product line. Management believes that once consumers sample a wider
variety of HyTech's products, they are more likely to re-order more of such
products, either as an entire collection, or as individual products at higher
prices.
Page 9 of 14
<PAGE>
Results of Operations (continued)
Research and development ("R&D") expenses reflect HyTech's efforts to identify
new product opportunities, develop and package the products for commercial
sale, perform appropriate efficacy and safety tests, and conduct consumer panel
studies and focus groups. R&D expenses increased 393% to $128,825 in the third
quarter of Fiscal 1996, compared to $26,151 for the same period in Fiscal 1995.
Such expenses for the nine (9) months ended September 30, 1996 increased 161%
to $382,886, compared to $146,704 for the corresponding period of Fiscal 1995.
These increases reflect HyTech's continual development of new products.
Selling, general and administrative expenses for the three (3) months ended
September 30, 1996 increased by 32% to $719,919 from $543,763 for the
corresponding period of Fiscal 1995. Such expenses for the nine (9) months
ended September 30, 1996 increased 36% to $1,975,115, compared to $1,448,673
for the corresponding period of Fiscal 1995. These increases are attributable
to an overall increase in salary requirements, expansion of full-time staff,
including the addition of customer service personnel, increased warehousing
costs and advertising expenses, primarily relating to the production and
distribution of HyTech's newsletter, which was introduced in September 1995.
Distribution Agreement expense of $3,145,305 pertains to costs incurred in
connection with the execution of the Amended License Agreement. In connection
with the execution and delivery of the Amended License Agreement, HyTech
granted DTR an option to purchase 1.5 million shares of the company's common
stock at $.01 per share, resulting in a one-time non-cash charge against
earnings of approximately $3.1 million. This non-cash charge has no effect on
the company's net shareholders equity.
Interest and investment income in the third quarter of Fiscal 1996 increased
21%, to $86,635 from $71,475 for the same period in Fiscal 1995. Such income
for the nine (9) months ended September 30, 1996 decreased 11% to $223,538,
compared to $549,992 for the corresponding period of Fiscal 1995. The increase
for the three (3) month period is due primarily to higher cash balances, while
the overall decrease for the nine (9) month period is due primarily to lower
cash balances and lower interest rates. HyTech maintains a conservative
investment strategy, deriving investment income primarily from U.S. Treasury
securities.
Net income for the three (3) months ended September 30, 1996 decreased to a
loss of $2,943,806 from income of $375,808 for the same period in Fiscal 1995.
Net income for the nine (9) months ended September 30, 1996 decreased to a loss
of $1,860,937, compared to income of $1,780,473 for the corresponding period of
Fiscal 1995. Such changes are due primarily to the Distribution Agreement
Expense and to the other factors discussed above.
Discounting the effect of the expenses associated with the Amended License
Agreement, HyTech would have reported net income for the three (3) months ended
September 30, 1996 of $201,499, or $.01 per share, and net income of
$1,284,368, or $.05 per share, for the nine (9) months ended September 30,
1996.
Page 10 of 14
<PAGE>
Results of Operations (continued)
- -------------------------------------------------------------------------------
(Forward Looking Statement)
Based upon proposed increases in air time and if QVC makes the minimum
purchases necessary to maintain its exclusive rights, management believes that
HyTech will have record sales and earnings for Fiscal 1997. This assumes,
however, that QVC makes its purchases on a pro rata basis over the annual term
of the Amended License Agreement. Further, no obligation exists for QVC to
promote or purchase product, and no assurances can be given that QVC will meet
escalating minimum purchase levels for subsequent years in order to maintain
exclusive rights.
(End of Forward Looking Statement)
- -------------------------------------------------------------------------------
Liquidity and Financial Resources
HyTech's overall financial condition remains strong as reflected in the
Condensed Consolidated Balance Sheets at September 30, 1996 compared to
December 31, 1995. At September 30, 1996, working capital increased by $1
million from December 31, 1995, due primarily to cash flow from operations of
$2.8 million for the period, offset by the payment of quarterly dividends
totaling $1.7 million.
HyTech's cash flow from operations of $2.8 million was a direct result of its
marketing efforts with QVC. The Amended License Agreement provides that QVC
purchase products directly from HyTech for resale to consumers, and that HyTech
receive payment from QVC thirty days after QVC's receipt of such goods.
HyTech paid regular quarterly cash dividends of two and one-half cents ($0.025)
per share on March 29, 1996, June 25, 1996 and September 30, 1996 to
shareholders of record on March 15, 1996, June 14, 1996 and September 16, 1996,
respectively.
Also in connection with the execution of the Amended QVC License Agreement, QVC
exercised options to purchase 500,000 shares of HyTech's common stock, at $2.50
per share, and paid HyTech $1.25 million. HyTech also granted to QVC an option
to purchase an additional 500,000 shares at $2.75 per share.
Based on HyTech's present cash position, absence of any short- or long-term
debt, third-party contractual approach to manufacturing and R&D, and present
business strategy, management believes that HyTech has adequate resources to
meet normal, recurring obligations as they become due. Further, in view of the
thirty (30) day payment terms in connection with sales to QVC, management does
not anticipate any difficulty in financing foreseeable inventory requirements.
Page 11 of 14
<PAGE>
Liquidity and Financial Resources (continued)
Management is currently reviewing various methods of marketing Hydron brand
products via traditional retail distribution. Although management has not made
any substantial commitments with respect to traditional domestic retail
marketing, HyTech has entered into a distribution agreement with an Australian
based health and beauty products distributor for Australia and New Zealand,
whereby HyTech's products are to be marketed for the first time at traditional
retail outlets. The agreement is subject to certain minimum escalating
purchases, and reserves to HyTech electronic marketing rights in the
territories. In addition, management is presently working on its first full
color catalog, called a "magalog," a catalog combined with a magazine flavor
reflecting real life customer experiences. Management believes that the initial
mailing of its premier edition will be mailed before November 30, 1996.
Management recognizes that HyTech does not have the financial resources to
sustain a major national advertising campaign to market its products. In view
of the foregoing, management has obtained with QVC and Hydromercial Partners,
and continues to seek internationally, marketing, licensing and distribution
agreements with third parties that have greater financial resources and that
can enhance HyTech's product introductions with appropriate national marketing
support programs.
The effect of inflation has not been significant upon either the operations or
financial condition of HyTech.
Part II - Other Information
Item 4. Submission of Matters to a Vote of Security Holders
(a) The Annual Meeting of Shareholders (the "Meeting") of Hydron
Technologies, Inc. was held on July 25, 1996 at 10:00 a.m., local time, at the
Boca Raton Marriott Crocker Center, 5150 Town Center Circle, Boca Raton,
Florida 33486.
(b) The following individuals were nominated for election as members of the
Board of Directors to hold office for a term of one (1) year until the next
annual meeting of shareholders and until their successors are elected and
qualify: Harvey Tauman, Richard Tauman, Chaudhury M. Prasad, Frank Fiur, Samuel
M. Leb, M.D., Nestor Cardero, C.P.A., Joseph A. Caccamo, Richard Banakus and
Hugues Lamotte. A vote was taken and the results thereof were as follows:
(i) 18,629,321 votes for Harvey Tauman and 338,522 votes withheld;
(ii) 18,629,749 votes for Richard Tauman and 338,094 votes withheld;
(iii) 18,632,789 votes for Chaudhury M. Prasad and 335,054 votes
withheld;
(iv) 18,720,912 votes for Frank Fiur and 246,931 votes withheld;
(v) 18,726,512 votes for Samuel M. Leb, M.D. and 241,331 votes
withheld;
(vi) 18,730,043 votes for Nestor Cardero, C.P.A. and 237,800 votes
withheld;
(vii) 18,624,943 votes for Joseph A. Caccamo and 342,900 votes withheld;
(viii) 18,728,203 votes for Richard Banakus and 239,640 votes withheld;
and
(ix) 18,728,903 votes for Hugues Lamotte and 238,940 votes withheld.
Page 12 of 14
<PAGE>
Part II - Other Information (continued)
A plurality of the votes having been cast in favor of each of the
above-named Directors, they were duly elected to serve a one (1) year term.
(c) The final item of business was the proposal to ratify the appointment of
Ernst & Young LLP, the independent certified public accountants of the
Corporation, for the current fiscal year. The results of the voting were as
follows:
18,889,146 votes for the resolution,
33,249 votes against and
35,448 votes abstained.
A majority of the shares cast at the meeting have voted for the resolution,
and the resolution was duly passed.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits - 11 - Computation of Earnings Per Share
(b) Current report on Form 8-K (Date of Report, July 19, 1996), reporting items
5 and 7.
Page 13 of 14
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
HYDRON TECHNOLOGIES, INC.
By: /s/ Thomas G. Burns
-----------------------------------
Thomas G. Burns, Vice President,
Finance and Chief Financial Officer
Dated: November 14, 1996
Page 14 of 14
<PAGE>
HYDRON TECHNOLOGIES, INC. AND SUBSIDIARIES
Exhibit (11) - Statement Re: Computation of Earnings Per Share
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
--------------------------- ----------------------------
1996 1995 1996 1995
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Primary:
Average shares outstanding 22,664,849 22,629,607 22,664,849 22,496,553
Net effect of dilutive stock
options - based on the
treasury stock method using
average market price 1,552,781 513,050 627,303 651,858
------------ ------------ ------------ ------------
Totals 24,217,630 23,142,657 23,292,152 23,148,411
============ ============ ============ ============
Net income $ (2,943,806) $ 375,808 $ (1,860,937) $ 1,780,473
============ ============ ============ ============
Per share amount $ (0.12) 0.02 $ (0.08) 0.08
============ ============ ============ ============
Fully diluted:
Average shares outstanding 22,664,849 22,629,607 22,664,849 22,496,553
Net effect of dilutive stock
options - based on the
treasury stock method using
quarter-end market price 1,552,781 513,050 1,552,781 668,816
------------ ------------ ------------ ------------
Totals 24,217,630 23,142,657 24,217,630 23,165,369
============ ============ ============ ============
Net income $ (2,943,806) $ 375,808 $ (1,860,937) $ 1,780,473
============ ============ ============ ============
Per share amount $ (0.12) 0.02 $ (0.08) 0.08
============ ============ ============ ============
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
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