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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D. C. 20549
FORM 10-QSB
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QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the three months ended September 30, 1996
Commission File Number 0-10683
HYDROMER, INC.
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(Exact name of registrant as specified in its charter)
NEW JERSEY 22-2303576
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(State of incorporation) (I.R.S. Employer
Identification No.)
35 COLUMBIA ROAD, BRANCHBURG, NEW JERSEY 08876-3518
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (908) 526-2828
Securities registered pursuant to Section 12 (b) of the Act: None
Securities registered pursuant to Section 12 (g) of the Act:
COMMON STOCK WITHOUT PAR VALUE
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(Title of class)
Check whether the issuer (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(s,) and (2) has been subject to such filing requirements for the
past 90 days. Yes (X) No( )
Indicate the number of shares outstanding or each of the issuer's classes
of Common Stock as of the close of the period covered by this report.
CLASS OUTSTANDING AT SEPTEMBER 30, 1996
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4,378,904
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HYDROMER, INC.
INDEX TO FORM 10-QSB
September 30, 1996
Page No.
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Part 1--Financial Information
Condensed Financial Statements
Balance Sheets - September 30, 1996 & June 30, 1996............ 2
Statements of Operations for the three month period
September 30, 1996 and 1995.................................. 3
Statements of Cash Flows for the three months ended
September 30, 1996 and 1995.................................. 4
Notes to Financial Statements.................................. 5
Management's Discussion and Analysis of the Financial
Condition and Results of Operation........................... 6
Part II--Other Information............................................... 7
1
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HYDROMER, INC.
BALANCE SHEETS
September 30, June 30,
(UNAUDITED) (AUDITED)
1996 1996
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ASSETS
Current Assets:
Cash and cash equivalents .......................... $ 217,071 $ 167,900
Trade receivables less allowance for doubtful
accounts of $8,831 and $8,831, respectively ...... 321,900 316,271
Marketable investment securities ................... -- --
Inventory .......................................... 160,926 171,360
Prepaid expenses ................................... 70,596 45,262
Deferred asset tax ................................. 61,248 61,248
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Total Current Assets ................................. 831,741 762,041
Property and Equipment, net .......................... 219,106 222,514
Deferred Tax Asset ................................... 61,247 61,247
Other Assets ......................................... 10,185 9,875
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$1,122,279 $1,055,677
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable ................................... $ 37,349 $ 22,356
Accrued expenses ................................... 31,059 70,261
Income payable tax ................................. 59 59
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Total Current Liabilities ............................ 68,467 92,676
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Stockholders' Equity
Common stock -- no par value, authorized
6,000,000 shares, issued and outstanding,
4,378,904 shares ................................. 2,922,708 2,922,708
Contributed capital ................................ 577,750 577,750
Accumulated deficit ................................ (2,440,506) (2,531,317)
Unrealized gain on marketable investment
securities ....................................... -- --
Treasury stock, 10,917 common shares at cost ....... (6,140) (6,140)
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Total Stockholders' Equity ........................... 1,053,812 963,001
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$1,122,279 $1,055,677
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2
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HYDROMER, INC.
STATEMENTS OF INCOME
Three Months Ended
September 30,
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1996 1995
UNAUDITED UNAUDITED
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REVENUES:
Product sales and services ........................ $ 198,853 $ 105,638
Royalties, options and licenses Fees .............. 259,742 233,876
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458,595 339,514
Cost of Product Sales ............................... 71,201 43,943
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Gross profit ...................................... 387,394 295,571
Selling, General and Administrative ................. 192,024 164,028
Research and Development ............................ 106,332 117,504
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Operating Income .................................. 89,038 14,039
Interest Income ..................................... 1,898 3,485
Interest Expense .................................... -- --
Gain on Sale of Securities .......................... -- --
Other Income ........................................ -- 85,300
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Income (loss) before provison for income taxes .... 90,936 102,824
Provision for Income Taxes Expense (Benefit) ........ 125 --
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Net Income (Loss) ................................. $ 90,811 $ 102,824
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Income (Loss) Per Common Share .................... $ 0.021 $ 0.024
========= =========
Dividends per share ............................... $ 0.000 $ 0.000
========= =========
Weighted Average Common Shares Outstanding .......... 4,367,987 4,367,987
========= =========
3
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HYDROMER, INC.
STATEMENTS OF CASH FLOWS
Three Months Ended
September 30,
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1996 1995
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (Loss) .................................. $ 90,811 $ 102,824
Adjustments to reconcile net income (loss)
to net cash (used in) operating activities
Depreciation and amortization .................. 9,579 7,265
Gain on sale of securities ..................... -- --
Changes in Assets and Liabilities
Trade receivables ............................ (5,629) 76,087
Inventory .................................... 10,434 --
Prepaid expenses ............................. (25,334) (24,067)
Deferred tax asset ........................... -- --
Other assets ................................. (310) (2,061)
Accounts payable and accrued liabilities ..... (24,209) (13,053)
Income taxes payable ......................... -- (15,979)
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Net Cash (Used in) Operating Activities .... 55,342 131,016
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CASH FLOWS FROM INVESTING ACTIVITIES:
Cash purchases of property and equipment ........... (6,171) (29,026)
Cash proceeds received from sale of marketable
investment securities ............................ (200,000) --
Cash purchases of marketable investment securities . 200,000 192,617
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Net Cash Provided by (Used in) Investing
Activities ............................... (6,171) 163,591
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Net Increase (Decrease) in Cash and Cash Equivalents . 49,171 294,607
Cash and Cash Equivalents at Beginning of Year ....... 167,900 41,030
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Cash and Cash Equivalents at End of Year ............. $ 217,071 $ 335,637
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4
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HYDROMER, INC.
Notes to Financial Statements
In the opinion of management, the accompanying unaudited financial statements
include all adjustments (consisting of only normal adjustments) necessary for a
fair presentation of the results for the interim periods. No provision has been
made for federal income taxes because of the availability of loss carryforwards
from prior fiscal years.
5
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
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The Company's revenues of $458,595 for its first fiscal quarter ended September
30, 1996, were $119,081, or 35% greater than the $339,514 of revenues recorded
in the same quarter of the previous fiscal year. The increase for the quarter is
due to higher revenues from product sales. The Company's sales of patented
coating solutions and related services were $198,583 as of September 30, 1996 or
47% greater than the 105,638 recorded in the same quarter of the previous fiscal
year.
The net income of $90,811, or $0.02 per share for the current quarter was
$12,013 less than the net income of $102,824, or $0.02 per share, reported for
the same quarter of the prior fiscal year. This decrease in net income for the
quarter was due to the recording of the settlement of $85,000 in other income
with our former auditors Peat Marwick in the prior fiscal year.
Cost of sales of $71,201, represented 36% of the sales of patented coating
solutions and related services for the first quarter, were $27,258 greater than
the $43,943, which represented 42% of the sales of patented coating solutions
recorded in the same quarter in the prior fiscal year. Overall dollar increases
relate to the increase of sales and change in the product mix of sales of
coating solutions, while the percentage of decrease in the cost of sales is also
due to the change in the product mix.
Operating expenses during the quarter of $298,356, or 65% of revenues, were
$16,814 greater than the $281,532, or 83% of revenues recorded in the prior
fiscal year.
Financial Condition
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Working capital increased by $93,912 to $763,274 at September 30, 1996 from
$669,362 at June 30, 1996, as result of the profit the Company reported for the
period. Cash and cash equivalents increased during the period from $167,900 to
$217,071. The Company believes that future revenues will provide a sufficient
cash flow to maintain operations at current levels.
6
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PART II -- Other Information
Item 6. Exhibits and Reports on form 8-K:
a) Exhibits -- none
b) Reports on Form 8-K - There were no reports on Form 8-K filed
for the quarter ending September 30, 1996
7
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on his behalf by the
undersigned thereunto duly authorized.
HYDROMER, INC.
/s/ MARK KLYPKA
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Mark Klypka
Vice President
Finance & Administration
Chief Financial Officer
DATE: October 30, 1995
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<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> SEP-30-1996
<CASH> 217,071
<SECURITIES> 0
<RECEIVABLES> 321,900
<ALLOWANCES> 0
<INVENTORY> 160,926
<CURRENT-ASSETS> 831,741
<PP&E> 688,892
<DEPRECIATION> (469,786)
<TOTAL-ASSETS> 1,122,279
<CURRENT-LIABILITIES> 68,467
<BONDS> 0
0
0
<COMMON> 2,922,708
<OTHER-SE> (1,856,616)
<TOTAL-LIABILITY-AND-EQUITY> 1,053,812
<SALES> 198,853
<TOTAL-REVENUES> 458,595
<CGS> 71,201
<TOTAL-COSTS> 192,024
<OTHER-EXPENSES> 106,332
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 90,936
<INCOME-TAX> 125
<INCOME-CONTINUING> 90,811
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 90,811
<EPS-PRIMARY> .020
<EPS-DILUTED> 0
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