================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D. C. 20549
FORM 10-KSB
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended June 30, 1997
Commission File Number 0-10683
HYDROMER, INC.
-----------------------------------------------------------------
(Exact name of registrant as specified in its charter)
New Jersey 22-2303576
------------------------------ ------------------------------
(State of incorporation) (I.R.S. Employer
Identification No.)
35 Columbia Road, Branchburg, New Jersey 08876-3518
- ------------------------------------------ ------------------------------
(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
------------------------------
(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 ( )
Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10KSB
or any amendment to this Form 10KSB (X)
The aggregate market value of the voting stock held by non-affiliates of
the Registrant at September 3, 1996 was approximately $308,673
The number of shares of Registrant's Common Stock outstanding on September
3, 1997 was 4,367,987.
Portions of the Annual Report to Stockholders for the fiscal year ended
June 30, 1997 are incorporated by reference in Part II of this report. Portions
of the Proxy Statement of Registrant dated September 3, 1997 are incorporated by
reference in Part III of this report.
================================================================================
<PAGE>
PART I
ITEM 1. BUSINESS
GENERAL
Hydromer, Inc. (the "Company") is a polymer research and development
company organized as a New Jersey Corporation in 1980 for the purpose of
developing polymeric complexes for commercial markets in the medical and
industrial fields. The Company owns several process and applications patents for
Hydromer(R) ("Hydromer"), which is both a polymeric substance that becomes
extremely lubricious (slippery) when contacted by water and a technique of
grafting or applying this substance onto surfaces which may consist of a wide
variety of materials, including polyurethane, polyvinyl chloride, and metals.
"Hydromer(R)" is a trademark of the Company. The Company has also been issued
patents for a permanent anti-fog material, a hydrophilic polyurethane foam,
hydrophilic polyurethane blends, hydrophilic polyvinylbutyral alloys, several
different biocompatible hydrogels and an anti-bacterial medical material, and
owns a trademark Sea-Slide(R), a coating for boats, which the Company is
marketing. Other patent applications have been filed. See "Patents and
Trademarks" below.
From its inception in 1980 to mid 1984, the Company was engaged
primarily in research and development activities relating to Hydromer coatings.
The Company believes that the polymer and water interface of Hydromer provides a
surface lubricity superior to the quality of other presently marketed
silicone-based lubricants used to treat medical devices. When treated with
Hydromer coating, a medical device becomes highly slippery upon contact with
water, facilitating its insertion into any orifice of the body, in particular,
the nasal/oral, rectal and urinary orifices, or penetration through the skin,
thus reducing discomfort for the patient. Hydromer coatings are bonded to the
medical device unlike silicone-based lubricants which must be re-applied after
each use of the medical device. During its fiscal year ended June 30, 1997, the
Company entered into three license agreements for the use of Hydromer. Hydromer
has license agreements with eighteen different companies covering the
application of Hydromer coatings to heart pacemaker leads, wound drains, enteral
feeding products, guide wires, intermittent urinary catheters; certain
urological devices, central venous catheters, ear prostheses, guiding catheters,
razor cartridges and angioplasty balloon catheters, embolization delivery
devices, biliary and pancreatic stents, umbilical catheters, infusion catheters
for peripheral and neurological uses and certain urological devices. See "Option
and License Agreements" below.
The Company believes that Hydromer technology may have further
application both in connection with medical products and products outside the
medical field. See "Potential Applications" below.
During the 1986 fiscal year, the Company was granted a U. S. Patent for
hydrophilic polyurethane foam and dental and biomedical products fabricated
therefrom. This foam has been independently tested and exhibits superior
absorptivity, high tensile strength when wet and reduced peel adhesion to the
skin.
In addition to its foregoing activities, the Company is marketing the
following products based on its polymer technology:
Anti-Fog - a coating for plastics (e.g. ski and swim goggles) which
prevents the accumulation of vision-obscuring condensation under high humidity
conditions. A more advanced version of anti-fog coating was patented in August
1984 and is being sold in bulk to manufacturers of industrial safety and swim
goggles, aircraft windows and meter covers. Condensation control coatings have
been developed for use on greenhouses and food packaging.
Sea-Slide(R) - a Hydromer-based drag reducing marine coating which
reduces friction between hull and water, and can be used over most anti-fouling
paints. A U. S. Patent covering this coating and other potential uses was issued
in February 1987.
Cosmetic formulations - aqueous-based polymer blends, were introduced
during 1988 and are protected by the polymer blends patent issued in February
1987. These formulations are being sold
2
<PAGE>
to major cosmetic firms for use in hair dyes, hair conditioners, mascaras, eye
shadows and body lotions and are being tested for use in shampoos and
sunscreens.
HYDROMER(TM) Poison Oak and Ivy Barrier, is a barrier lotion that
protects the wearer from the effects of poison ivy, poison oak, poison sumac
plant allergens.
Until September 1982, approximately 99% of the outstanding common
stock, without par value (the "Common Stock"), of the Company was owned by
Biosearch Medical Products Inc. ("BMP"), which in turn was controlled by Manfred
F. Dyck, who is Chief Executive Officer, a Director and the Chairman of the
Board of the Company. On September 16, 1982, BMP distributed its shareholdings
in the Company pro rata to the holders of its common stock. In connection with
this distribution, the Company granted to BMP an exclusive, world-wide
perpetual, royalty-free license to use the Hydromer technology in connection
with the development, manufacture and marketing of biomedical devices for
enteral feeding applications.
OPTION AND LICENSE AGREEMENTS
A substantial portion of the Company's revenues in prior years and
$59,500 in the 1997 fiscal year have been derived from option and license
agreements. The option agreements have in general provided that the customers
pay to the Company a flat fee in exchange for the right during a limited period
of time (i) to use the Hydromer process to determine whether the customer's
products lend themselves to treatment with the process and (ii) to test market
such products. The option agreements have also given the customers the right
subsequently to enter into a license agreement with the Company. At the
customer's option, a license agreement with respect to the marketing of a
product treated with Hydromer may then be entered into, providing for payment to
the Company of an initial flat fee, followed by periodic royalty payments based
on sales.
The Company has previously reported license agreements in effect
relating to applications of the Hydromer as follows: (See Annual Report on Form
10-K for the fiscal years ended June 30, 1983 through 1996 and Form 10KSB for
fiscal year ended 1997.)
LICENSEE/APPLICATION
Arrow International, Inc. polyurethane-jacketed guidewires.
Axiom Medical, Inc. wound drains.
Biosearch Medical Products Inc. enteral feeding systems, intermittent urinary
catheters, stents, medical guidewires and electronic probes.
Cordis Corporation angioplasty balloon catheters
Cordis Endovascular Systems infusion microcatheters.
CR Bard (formally St. Jude Medical, Inc.) intra-aortic balloon catheters,
introducer systems and introducer needles.
Film Specialties, Inc. use anti-fog on adhesive backed film.
Medispo (formally Cosmo Ikko) certain urological devices.
Johnson & Johnson Orthopaedics Inc. casting gloves.
Kendall HealthCare Products certain urological devices.
Ohmeda (formally U. S. Viggo, Inc.) central venous catheters.
Smith & Nephew (formally Richards Medical) ear prostheses.
Schneider Stent USA delivery devices for expandable stents.
Sherwood Davis & Geck Umbilical catheters
Circon Surgitek (Division of Circon Corporation and formally Surgitek which was
a Division of Cabot Medical) guidewires, urinary stents.
Boston Scientific (Van-Tec) guide wires and certain urological devices.
Wilkinson Sword Ltd. razor cartridges.
SCIMED Boston Scientific Corporation (SCIMED Peripheral Interventions)
polyurethane jacketed guidewires and infusion catheters for peripheral and
neurological uses.
3
<PAGE>
Piolax (formally Katoh Hatsujyo Kaisha, LTD) polyurethane jacketed guidewires.
In Fiscal 1997, the Company entered into two non-exclusive license
agreement with Biosearch Medical Products Inc. (Biosearch), Sherwood Davis &
Geck and an amendment to an agreement with SCIMED Boston Scientific Corporation
pursuant to which they were granted the non-exclusive right to coat medical
guidewires, umbilical catheters and infusion catheters for peripheral and
neurological uses. The companies are obligated to make royalty payments on a
fixed rate per unit sold of coated product, except Sherwood Davis & Geck, which
was granted a fully paid up license. The license will remain in effect until the
expiration of the licensed patents or failure to meet annual minimum royalties.
PRODUCTS
Coating solutions for use on medical devices are manufactured and sold
by the Company to its licensees and others. The Company has received a United
States and foreign patents for a permanent type anti-fog coating. The Company is
selling bulk quantities of anti-fog solution to manufacturers of swim goggles,
industrial safety equipment, aircraft windows and meter covers, both in the
U.S. and foreign countries.
The Company has developed a condensation control coating for use on
structured greenhouse coverings. Which it sells to a major corporation that
manufactures this material in the U.S. and Europe.
A food packaging coating has been formulated using only materials that
are generally recognized as safe for food contact and independent laboratory
extraction tests of the coating have demonstrated that the extractibles are well
within levels specified by the FDA.
Another product introduced in 1984 was "Sea-Slide(R)", a drag reducing
overcoating for boats and ships. This product is designed to improve fuel
efficiency by lowering the friction between hull and water. It is being marketed
through a repackager and distributor who services the marine industry.
Sea-Slide(R) has been shown at major marine shows. Bulk quantities are also
being sold to distributors in Europe who package the product for local markets.
In the 1988 fiscal year, the Company introduced aqueous-based
formulations for use as a component in beauty aids. This product is being
marketed through distributors in the U.S. and abroad and is currently being sold
for use in mascaras, hair dyes, hair conditioners, hair shampoos, eye shadows,
hair colorings, hair sprays, body lotions and perfumes.
In the 1996 fiscal year the Company introduced our very first consumer
oriented product, Hydromer(R) Poison Oak and Ivy Barrier. We have developed
national accounts for this product representing a cross section of pharmacies,
sporting goods and specialty stores (country clubs, campsites, resorts). We also
are seeing a great deal of interest from the tree care, landscaping and utility
lines clearance industries. Despite initial interest sales of the product did
not reach expected levels in fiscal 1997.
During the twelve months ended June 30, 1997, revenues of $748,006 were
realized from sales of products, as compared with $632,307 in the fiscal year
ended June 30, 1996.
The Company's processes utilize various chemicals purchased from a
number of companies. The Company's primary suppliers are Elco Solvents, Inc.
Avenel, NJ and TR Metro Chemical, Inc. of Ridgefield, NJ. The Company has no
long-term contracts with any of its suppliers and believes that there are
adequate alternative sources of supply available for all raw materials that it
currently uses.
DEPENDENCE UPON CUSTOMERS
The Company derives substantially all of its revenues from one business
segment, i.e. polymer research and products derived therefrom. During the fiscal
year ended June 30, 1997, the Company recognized revenues from two major
customers.
The Company sold products and collected royalty income representing
more than 10% of its total revenues for the year ended June 30, 1997, to Cordis
Corporation and Warner Lambert; for the year ended June 30, 1996, to Cordis
Corporation and Phoenix Chemical Inc.
4
<PAGE>
POTENTIAL APPLICATIONS
The Company continues to explore other applications of the complexing
capabilities of polymeric substances, such as antimicrobial agents. The Company
currently is working on further applications of its patented technologies to
existing products of other companies, including cosmetics, wound dressings, and
a wide variety of medical devices. These products and applications are in the
preliminary development stage and are subject to substantial further development
before their feasibility can be verified.
On the basis of its market analyses, as well as laboratory and in-vitro
testing of certain applications of Hydromer, the Company believes that
Hydromer's potential product applications, classified with reference to salient
Hydromer characteristics, are as follows:
1. Low Coefficient of Friction. Hydromer is a hydrophilic coating which when
contacted by water becomes extremely lubricious. The Company believes that this
unique feature would prove beneficial to any medical device that is inserted
into the body. Medical products that would so benefit include:
urinary products - urethral catheters and urinary drainage systems;
rectal products - enemas, rectal tubes, examination gloves and
proctoscopy devices (disposable);
nasal/oral products - suction catheters, oxygen catheters and endotracheal
tubes;
cardiovascular and - grafts, cardiac assist catheters
related products heart-lung tubing.
2. Ability to be Complexed with Other Functional Chemicals. The Hydromer
hydrophilic polymer coating can be complexed with other chemicals. For example,
Hydromer coating complexed with iodine forms an effective antimicrobial barrier.
The Company believes that this unique feature would lend itself to application
on a wide variety of currently marketed medical products, including Foley
catheters, wound drains, wart and corn dressings, burn dressings, intravenous
catheters, surgical dressings and adhesive bandages.
3. Cross-link Density Can be Controlled. The Hydromer hydrophilic polymer
coating, through controlled cross-linking, has been further developed into a
special anti-fog coating. Such a coating is (a) resistant to fogging under a
wide range of temperature/humidity conditions; (b) transparent and has
heat/light stability; (c) long lasting, i.e., will not chip or peel and offers
more scratch resistance than do most commercial plastics; (d) inert to most
commercial glass cleaners; (e) less prone to static dirt pickup; and (f)
applicable by dip, spray or roll coating. A U.S. Patent for this material was
issued to the Company in August 1984. This anti-fog product has use on sports
goggles, windows, mirrors and other products, either by direct application or by
coating of an adhesive backed film. Food grade versions are available for
packaging of fresh produce, meats and deli-foods.
RESEARCH AND DEVELOPMENT
The Company's research and development activities presently are, and
during the next year are expected to be, devoted primarily to the development
and enhancement of the products described above and to the design and
development of new products. The Company incurred expenses of approximately
$385,000 during the twelve months ended June 30, 1997, approximately $498,000
during the twelve months ended June 30, 1996, and approximately $575,000 during
the twelve months ended June 30, 1995. All of such activities were sponsored by
the Company. The major portion of such expenses was applied toward salaries and
other expenses of personnel employed on a regular basis in such work. See
"Employees" below. The Company plans to maintain R & D spending at approximately
the 1997 level during fiscal 1997. See "Potential Applications" above.
COMPETITION
The Company considers the most significant competitive factors in its
market for its patented coatings to be product capability and performance
(including reliability and ease of use), in addition to price and terms of
purchase.
The Company owns both process patent and applications patents for
Hydromer coatings (see "Patents and Trademarks" below) two of which expire in
Fiscal 1998 one in August 1997 and the
5
<PAGE>
other in March 1998. Although the medical products market is highly competitive,
the Company does not believe that there is any other product available which
performs functions significantly comparable to those which are performed by
Hydromer, in terms of lubricity, complexing capabilities, durability and cost.
While management believes the Company has a dominant position in the
market for medical device coatings in which it competes, and that its
hydrophilic foam, anti-fog coatings and hydrogel products are technologically
superior to other products in the market, there can be no assurance that
alternatives, with similar properties and applications, could not be developed
outside the scope of the Company's patents by other companies. The Company is
aware that there are other similar technologies available and/or being developed
by others. The industry in which the Company competes is characterized by rapid
technological advances and includes competitors that possess significantly
greater financial resources and research and manufacturing capabilities, larger
marketing and sales staffs and longer established relationships with customers
than the Company does at present or will for the foreseeable future.
MARKETING
The Company intends to market its products and services through four
principal means:
1. Sale of Development Services: The Company intends to move its effort away
from straight technology licensing and toward contract product development. The
Company has significant expertise in polymer development and applications. By
exhibiting at selected trade shows in the medical device and cosmetic fields,
the Company expects to generate interest in its technology and products, with a
view toward acting as an outside product development arm for companies in these
fields.
2. Joint Development: The Company will continue to seek joint development
programs, comarketing programs and other business arrangements with potential
partners.
3. Direct and Indirect Product Marketing: Retail product(s) are marketed and
sold directly to consumers and through wholesalers and stores. Coating solutions
for medical devices and condensation control coatings are marketed directly to
manufacturers of products to which they are applied. Sea-Slide coating is being
marketed through independent sales organizations, serving primarily a regional
market. Cosmetic formulations are being marketed by U.S. and international
distributors and, internally, directly to cosmetic companies.
4. Licensing: The Company will continue its endeavors to license its technology
to current market leaders in the medical device, pharmaceutical, and other
fields, whereby the Company will grant exclusive or non-exclusive rights for the
Hydromer coating treatment of existing or new products, and the development of
specific products utilizing its foam technology under its patents. In return,
the Company generally would earn royalties based on sales of such treated or new
products. Such licenses will usually be very narrow. The activities leading to
the consummation of a license agreement normally are lengthy and require
establishing a scientific dialogue with potential customers, treating samples
supplied by that customer with Hydromer coatings, determining if the treatment
is feasible and cost effective, testing the coated products in a laboratory and
then negotiating a mutually acceptable option agreement. An option fee may be
paid by the customer which would give the customer exclusive rights to use the
Hydromer treatment on the specified product for a specified period. During such
period, the optionee can test market the coated product and/or determine its
ability to treat the product in its own manufacturing process. If the customer
determines that the subject product should be treated with Hydromer coating on a
commercial basis, it may either perform the Hydromer coating treatment itself
under a license agreement with the Company or it may have the a third party
perform the Hydromer coating treatment.
PATENTS AND TRADEMARKS
The Company owns both a United States process patent and an
applications patent for Hydromer, which are expiring in August 1997 and March
1998. The Company has granted to BMP an exclusive, royalty-free license of the
Hydromer process with respect to enteral feeding products. In addition, there
are currently 10 US and 6 international patents. Management believes that the
protection afforded by the Hydromer patents most
6
<PAGE>
going well into the year 2000, will be a significant factor in the Company's
ability to market its hydrophilic polymers. Anticipating patent expiration, the
Company has focused on licensing and developing products based upon its newer
technologies. The Company has also been issued United States and foreign patents
for a permanent anti-fog. A U.S. patent was issued in October 1985 for a
hydrophilic polyurethane foam that is expected to have numerous medical
applications. Foreign patents covering this material issued in July 1990. A U.S.
patent for hydrophilic polymer blends, which covers the Company's coating for
boats and the cosmetic formulations, was issued in February 1987. A U.S. Patent
has been received for Hydrophilic Polyvinylbutyral Alloys was issued in July
1989 and foreign applications are pending. This patent protects the condensation
control coatings that have been developed for greenhouses and food packaging.
U.S. and foreign patents have also been issued for an anti-bacterial medical
material that can be incorporated in a foam or as a coating. The Company has
submitted a United States patent application in respect of its new composition,
barrier film, and method for preventing contact dermatitis developed by the
company's research and development staff.
The Company owns the registered trademark "Hydromer" in the United
States and other countries.
EMPLOYEES
As of June 30, 1997, the Company had eleven full-time employees,
consisting of eight engaged in research and development, quality control and
assurance, coating of products for others and mixing of chemicals for the
Company's products, one in marketing and two in general administrative and
executive functions. The chief executive officer duties were assumed by Manfred
F. Dyck, Chairman of the Board, who agreed to serve the Company for a minimum of
five days per month. The Company does not have a collective bargaining agreement
with any of its employees and considers its relationship with its employees to
be excellent.
GOVERNMENT REGULATIONS
The Company's medical products come under the jurisdiction of the FDA,
as well as other federal, state and local agencies, and similar agencies in
other countries.
In connection with the Company's license agreements, it is generally
the obligation of the licensee to conform to any required FDA pre-market
notification or other regulations. To the Company's knowledge, all such
licensees who are marketing FDA regulated licensed products are in such
compliance. The Company may in the future desire to market additional
applications of Hydromer to existing products, or products introduced by it,
which may be subject to such FDA approval procedures as proof of safety and
effectiveness of the applications or products, or adherence to prescribed design
standards. There can be no assurance that such approvals would be forthcoming or
of compliance with such standards. Any such failure to obtain approvals or
non-compliance might have a significant adverse effect on the Company. However,
the Company intends to make every effort to obtain all necessary approvals and
to comply with such standards, and in the case of its licensed applications, to
require the licensees to obtain such approvals.
The Company does not manufacture medical products and therefore does
not come under the jurisdiction of the FDA nevertheless, it is the policy of the
Company to adhere to "Good Manufacturing Practices" during manufacturing of
Hydromer coatings.
The Company is also subject to federal and state regulations dealing
with occupational health and safety and environmental protection. It is the
policy of the Company to comply with these regulations and be responsive to its
obligations to its employees and the public.
EXECUTIVE OFFICERS
The executive officers of the Company are as follows:
Name Position with Company
- ---- ---------------------
Manfred F. Dyck ........................... Chairman of the Board,
Chief Executive Officer
and President
Age at August 31, 1997 -- 62
7
<PAGE>
Name Position with Company
- ---- ---------------------
Mark Klypka ............................... Chief Financial Officer
Vice President Finance
& Administration
Age at August 31, 1997 -- 43
Name
Name Position with Company
- ---- ---------------------
Robert D. Frawley ......................... Secretary and Corporate
Counsel
Age at August 31, 1997 -- 49
Manfred F. Dyck has been Chairman of the Board of the Company since
June 1983 and a Director of the Company since its inception. Mr. Dyck served as
Chief Executive Officer of the Company from its inception until October 1986,
and as of August 1989, reassumed the duties of Chief Executive Officer. Mr. Dyck
has been President and a Director of Biosearch Medical Products Inc. since 1975.
Mark Klypka has been Vice President of Finance and Administration and
Chief Financial Officer since May, 1996. Prior to joining the Company, Mr.
Klypka had been Vice President Treasurer for Bergen Commercial Bank, since
October 1993, Vice President Controller for First Morris Bank since June 1989.
Robert D. Frawley has been Secretary of the Company since January 1984.
Mr. Frawley has been an attorney in private practice since December 1985. He is
employed by the law firm of Smith, Stratton, Wise, Heher and Brennan, Princeton,
New Jersey since February 1994. From December 1983 to December 1985, Mr. Frawley
was Vice President - Corporate Counsel and Secretary of Biosearch Medical
Products Inc.
Item 2. PROPERTIES
The Company currently has one facility located in New Jersey. The
manufacturing research and development administrative and marketing functions of
the Company are located at 35 Columbia Road, Branchburg, New Jersey. The Company
signed a five year lease with a party not affiliated with the Company for the
Branchburg facility. The total value of the lease over the five year period is
$435,000. Future minimum rental commitments for the next five years as of June
30, 1997 on the aforementioned operating lease are as follows:
Fiscal year Operating Lease
----------- ---------------
1998 ......................... $ 79,375
1999 ......................... $ 91,250
2000 ......................... $101,875
2001 ......................... $ 43,750
The facilities will be adequate for the Company's operations for the
foreseeable future.
Item 3. LEGAL PROCEEDINGS
Not applicable
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
PART II
Item 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS
For information concerning this item, see page 1 of the Annual Report
to shareholders for fiscal year ended June 30, 1997 (the "Annual Report"), which
information is incorporated herein by reference.
Item 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
For information concerning this item, see page 4 of the Annual Report,
which information is incorporated herein by reference.
8
<PAGE>
Item 7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
For information concerning this item, see pages 5 through 11 of the
"Annual Report, Exhibits, Financial Statement Schedules," which information is
incorporated herein by reference.
Item 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
Not applicable.
PART III
Item 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
For information concerning this item, see "Item 1. Business - Executive
Officers" and pages 1 through 3 of the Proxy Statement filed with respect to the
1997 Annual Meeting of shareholders (the "Proxy Statement"), which information
is incorporated herein by reference.
Item 10. EXECUTIVE COMPENSATION
For information concerning this item, see page 3 of the Proxy
Statement, which information is incorporated herein by reference.
Item 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
For information concerning this item, see pages 2 through 4 of the
Proxy Statement, which information is incorporated herein by reference.
Item 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
For information concerning this item, see pages 2 through 4 of the
Proxy Statement, which information is incorporated herein by reference.
PART IV
Item 13. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) 1. Financial Statements:
The financial statement of the Company incorporated by reference in
this Report are listed in the attached Index to the Financial Statements and
Supplementary Data.
(a) 2. Financial Statement Schedules:
The financial statement schedules of the Company filed in this Report
are listed in the attached Index to Financial Statements and Supplementary Data.
(a) 3. Exhibits (not included)
The exhibits required to be filed as part of this Report are listed in
the attached Index to Exhibits.
(b) Current Reports on Form 8-K:
The Company has not filed any Current Reports on Form 8-K during the
quarter ended June 30, 1997.
9
<PAGE>
POWER OF ATTORNEY
The Company and each person whose signature appears below hereby
appoint Manfred F. Dyck and Robert D. Frawley as attorneys-in-fact with full
power of substitution, severally, to execute in the name and on behalf of the
registrant and each such person, individually and in each capacity stated below,
one or more amendments to the annual report which amendments may make such
changes in the report as the attorney-in-fact acting deems appropriate and to
file any such amendment to the report with the Securities and Exchange
Commission.
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 on
its behalf by the undersigned thereunto duly authorized.
HYDROMER, INC.
/s/ MANFRED F. DYCK President, Principal Executive Officer, September 11, 1997
- --------------------- Chairman of the Board of Directors
Manfred F. Dyck
/s/ MARK KLYPKA Vice President Finance & September 11, 1997
- --------------------- Administration Chief Financial Officer
Mark Klypka
Pursuant to the requirements of the Securities and Exchange Act of
1934, this report has been signed below by the following persons on behalf of
the registrant and in the capacities and on the dates indicated:
/s/ MANFRED F. DYCK President, Principal Executive Officer, September 11, 1997
- --------------------- Chairman of the Board of Directors
Manfred F. Dyck
/s/ URSULA M. DYCK Director September 11, 1997
- --------------------
Ursula M. Dyck
Director September , 1997
- --------------------
Dieter Heinemann
/s/ MAXWELL BOROW Director September 11, 1997
- --------------------
Maxwell Borow
/s/ ROBERT H. BEA Director September 11, 1997
- --------------------
Robert H. Bea
10
<PAGE>
INDEX TO EXHIBITS
3.a Certificate of Incorporation of the Company, as amended to date
3.b By-Laws of the Company, as amended to date
10.a Minutes of Meeting of the Board of Directors of the Company held
on March 5, 1981 with respect to stock options granted to Manfred F. Dyck
(Incorporated by reference to Exhibit 10.i to the Registration Statement).
10.b Agreement dated August 11, 1981 between Horizon Concepts, Inc.,
and the Company (Incorporated by reference to Exhibit 10.c to the Registration
Statement).
10.c Agreement dated January 27, 1982 between Reliable Pharmaceutical
Company, Inc. and the Company (Incorporated by reference to Exhibit 10.d to the
Registration Statement).
10.d License Agreement dated July 14, 1982 between Biosearch Medical
Products Inc. and the Company (Incorporated by reference to Exhibit 10.g to the
Registration Statement).
10.e Management Services Agreement dated July 14, 1982 between
Biosearch Medical Products Inc. and the Company (Incorporated by reference to
Exhibit 10.h to the Registration Statement).
10.f Amendment dated October 7, 1982 to Agreement dated January 27,
1982 between Reliable Pharmaceutical Company, Inc. and the Company, together
with letter dated October 14, 1982 from Reliable Pharmaceutical Company, Inc. to
the Company (Incorporated by reference to Exhibit 10.f to the 1983 Annual
Report).
10.g Hydromer Coating agreement dated February 11, 1983 between
Pacesetter Systems, Inc. and the Company (Incorporated by reference to Exhibit
10.g to the 1983 Annual Report).
10.h Lease Agreement dated April 5, 1983 between Salem Realty and the
Company (Incorporated by reference to Exhibit 10.h to the 1983 Annual Report).
10.i License Agreement dated April 25, 1983 between CardioSearch Inc.
and the Company (Incorporated by reference to Exhibit 10.i to the 1983 Annual
Report).
10.j Trademark License Agreement dated April 25, 1983 between
CardioSearch Inc. and the Company (Incorporated by reference to Exhibit 10.j to
the 1983 Annual Report).
10.k Agreement dated August 31, 1983 between Becton, Dickinson &
Company and the Company (Incorporated by reference to Exhibit 10.l to the 1983
Annual Report).
10.l Current Report on Form 8-K filed May 30, 1986
10.m Hydromer Coating License Agreement dated September 30, 1984
between Axiom Medical, Inc. and the Company (Incorporated by reference to
Exhibit 10.m to the 1984 Annual Report).
10.n 1982 Stock Option Plan of the Company (Incorporated by reference
to Exhibit 10.m to the 1983 Annual Report).
10.o Amendment dated June 26, 1984 to Agreement dated August 3, 1983
between Becton, Dickinson & Company and the Company (Incorporated by reference
to Exhibit 10.o to the 1984 Annual Report).
10.p License Agreement dated July 31, 1984 between Kendall Company and
the Company (Incorporated by reference to Exhibit 10.p to the 1984 Annual
Report).
10.q License Agreement dated March 1, 1985 between Van-Tec Inc. and the
Company and Letter of Amendment thereto dated June 13, 1985 (Incorporated by
reference to Exhibit 10.o to the 1985 Annual Report).
10.r Telex dated June 24, 1985 terminating License Agreement with
CardioSearch Inc. (Incorporated by reference to Exhibit 10.p to the 1984 Annual
Report).
10.s Amendment dated as of December 31, 1984 to Management Services
Agreement dated July 14, 1982 between Biosearch Medical Products Inc. and the
Company (Incorporated by reference to Exhibit 10.q to the 1985 Annual Report).
10.t Lease Renewal Agreement dated April 15, 1985 between Salem Realty
and the Company
11
<PAGE>
(Incorporated by reference to Exhibit 10.r to the 1985 Annual Report).
10.u Lease Agreement dated December 4, 1984 between Biosearch Medical
Products Inc. and the Company (Incorporated by reference to Exhibit 10.s to the
1985 Annual Report).
10.v License Agreement dated April 11, 1986 between Axiom Medical, Inc.
and the Company (Incorporated by reference to Exhibit 10.i to the 1986 Annual
Report).
10.w License Agreement dated September 13, 1985 between U.S. Viggo and
the Company (Incorporated by reference to Exhibit 10.c to the 1986 Annual
Report).
10.x License Agreement dated March 27, 1986 between Wilkinson Sword
Limited and the Company (Incorporated by reference to Exhibit 10.f of the 1986
Annual Report).
10.y Lease Renewal Agreement dated April 15, 1987 between Salem Realty
and the Company (Incorporated by reference to Exhibit 10.y to the 1987 Annual
Report).
10.z License Agreement dated April 30, 1986 between HPK International
and the Company (Incorporated by reference to Exhibit 10.j to the 1986 Annual
Report).
10.aa License Agreement dated August 1, 1986 between Film Specialties,
Inc. and the Company (Incorporated by reference to Exhibit 10.aa to the 1987
Annual Report).
10.ab Lease Renewal Agreement dated April 15, 1988 between Salem Realty
and the Company (Incorporated by reference to Exhibit 10.ab to the 1988 Annual
Report).
10.ac License Agreement dated June 30, 1987 between Richards Medical
Company and the Company (Incorporated by reference to Exhibit 10.ac to the 1988
Annual Report).
10.ad License Agreement dated December 1, 1987 between Mallinckrodt,
Inc. and the Company (Incorporated by reference to Exhibit 10.ad to the 1988
Annual Report).
10.ae Option Agreement dated January 28, 1988 between Cordis
Corporation and the Company (Incorporated by reference to Exhibit 10.ae to the
1988 Annual Report).
10.af Lease Agreement dated April 15, 1988 between Biosearch Medical
Products Inc. and the Company (Incorporated by reference to Exhibit 10.ag of the
1988 Annual Report).
10.ag Letters dated June 11, 1987 and September 22, 1987 to U.S.
Viggo, Inc. modifying License Agreement dated September 13, 1985, to cover only
central venous catheters (Incorporated by reference to Exhibit 10.ag to the
1988 Annual Report).
10.ah Lease Renewal Agreement dated April 15, 1989 between Salem Realty
and the Company (Incorporated by reference to Exhibit 10.ah to the 1989 Annual
Report).
10.ai Amendment dated October 1, 1988 to License Agreement dated
September 13, 1985, between U.S. Viggo and the Company (Incorporated by
reference to Exhibit 10.ai to the 1989 Annual Report).
10.aj License Agreement dated October 20, 1988 between Cordis Corp. and
the Company (Incorporated by reference to Exhibit 10.aj to the 1989 Annual
Report).
10.ak License Agreement dated March 31, 1989 between Cathlab Corp. and
the Company (Incorporated by reference to Exhibit 10.ak to the 1989 Annual
Report).
10.al Amendment dated December 1, 1988 to License Agreement dated
August 1, 1986 between Film Specialties, Inc. and the Company (Incorporated by
reference to Exhibit 10.al to the 1989 Annual Report).
10.am Finders Agreement dated August 20, 1987 between Phoenix Chemical,
Inc. and the Company (Incorporated by reference to Exhibit 10.am to the 1989
Annual Report).
10.an License Agreement dated September 10, 1989 between the Stent
Division of Schneider and the Company (Incorporated by reference to Exhibit
10.an to the 1990 Annual Report).
10.ao License Agreement dated March 30, 1990 between Cosmo Ikko Company
and the
12
<PAGE>
Company (Incorporated by reference to Exhibit 10.ao to the 1990 Annual
Report).
10.ap License Agreement dated April 12, 1990 between Interventional
Therapeutics, Inc. and the Company and amendment dated May 7, 1990 to the
Agreement dated April 12, 1990 between Interventional Therapeutics, Inc. and the
Company (Incorporated by reference to Exhibit 10.ap to the 1990 Annual Report).
10.aq Amended License Agreement dated January 1, 1990 between the
Wilkinson Sword group of companies and the Company (Incorporated by reference to
Exhibit 10.aq the 1990 Annual Report).
10.ar Lease Agreement dated April 15, 1990 between Salem Realty and the
Company (Incorporated by reference to Exhibit 10.ar to the 1990 Annual Report).
10.as Amendment to the Agreement dated July 31, 1984 between Kendall
Company and the Company (Incorporated by reference to Exhibit 10.as to the 1990
Annual Report).
10.at License Agreement dated January 11, 1991 between Biosearch
Medical Products Inc. and the Company (Incorporated by reference to Exhibit
10.at to the 1991 Annual Report).
10.au License Agreement dated May 16, 1991 between I E Sensors and the
Company (Incorporated by reference to Exhibit 10.au to the 1991 Annual Report).
10.av Lease Renewal Agreement dated April 15, 1991 between Salem Realty
and The Company (Incorporated by reference to Exhibit 10.av to the 1991 Annual
Report).
10.aw License Agreement dated July 25, 1991 between Johnson & Johnson
Orthopaedics and the Company (Incorporated by reference to Exhibit 10.aw to the
1992 Annual Report).
10.ax License Agreement dated August 19, 1991 between Navarre
Laboratories Ltd. and the Company (Incorporated by reference to Exhibit 10.ax to
the 1992 Annual Report).
10.ay Amended License Agreement dated September 15, 1991 between Boston
Scientific Corp. and the Company (Incorporated by reference to Exhibit 10.ay to
the 1992 Annual Report).
10.az Option/License Agreement dated September 23,1991 between Elan
Corp. PLC and the Company (Incorporated by reference to Exhibit 10.az to the
1992 Annual Report).
10.ba Lease Agreement dated November 1, 1991 between Morton Street
Realty and the Company (Incorporated by reference to Exhibit 10.ba to the 1992
Annual Report).
10.bb License Agreement dated August 17, 1992 between SCIMED Peripheral
Interventions, division of SCIMED Life Systems, Inc. and the Company.
(Incorporated by reference to Exhibit 10.bb to the 1993 Annual Report).
10.bc License Agreement dated March 9, 1993 between Arrow
International, Inc. and the Company. (Incorporated by reference to Exhibit 10.bc
to the 1993 Annual Report).
10.bd License Agreement dated April 28, 1993 between St. Jude Medical,
Inc. and the Company. (Incorporated by reference to Exhibit 10.bd to the 1993
Annual Report).
10.be License Agreement dated November 11, 1993 between Katoh Hatsujyo
Kaisha, Ltd. and the Company. (Incorporated by reference to Exhibit 10.be to the
1994 Annual Report).
10.bf Lease Agreement dated June 9, 1995 between Salem Realty and the
Company (Incorporated by reference to Exhibit 10.bf to the 1995 Annual Report).
10.bg Amendment dated September 20, 1995 to License Agreement dated
April 28, 1993 between St. Jude Medical, Inc. and the Company. (Incorporated by
reference to Exhibit 10.bg to the 1996 Annual Report).
10.bh License Agreement dated April 12, 1990 between Interventional
Therapeutics and the Company was terminated effective December 22, 1995.
(Incorporated by reference to Exhibit 10.bh to the 1996 Annual Report).
10.bi License Agreement dated May 16, 1991 between I E Sensors and the
Company was terminated effective December 31, 1995.
13
<PAGE>
(Incorporated by reference to Exhibit 10.bi to the 1996 Annual Report).
10.bj Consented to the assignment of license agreement dated April
28,1993 between St. Jude Medical, Inc. and the Company to CR Bard dated January
18, 1996. (Incorporated by reference to Exhibit 10.bj to the 1996 Annual
Report).
10.bk License Agreement dated April 30, 1986 between HPK International
and the Company was terminated effective February 19, 1996. (Incorporated by
reference to Exhibit 10.bk to the 1996 Annual Report).
10.bl License Agreement dated June 6, 1996 between Biosearch Medical
Products Inc. and the Company. (Incorporated by reference to Exhibit 10.bl to
the 1996 Annual Report).
10.bm License Agreement dated August 1, 1996 between Biosearch Medical
Products Inc. and the Company.
10.bn Amended License Agreement dated September 4, 1996 between SCIMED
(Boston Scientific Corporation and the Company.
10.bo License Agreement dated January 6, 1997 between Sherwood Davis &
Geck and the Company.
10.bp Use permit for certain designated area dated May 4, 1997 between
Biosearch Medical Products Inc. and the Company.
13 Annual Report to Shareholders for the fiscal year ended June 30,
1997.
25 Power of Attorney (see "Power of Attorney" in the Annual Report on
Form 10-KSB).
14
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> year
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> JUN-30-1997
<CASH> 716,045
<SECURITIES> 0
<RECEIVABLES> 431,150
<ALLOWANCES> 0
<INVENTORY> 148,753
<CURRENT-ASSETS> 1,473,515
<PP&E> 775,276
<DEPRECIATION> (503,533)
<TOTAL-ASSETS> 2,020,082
<CURRENT-LIABILITIES> 237,114
<BONDS> 0
0
0
<COMMON> 2,922,708
<OTHER-SE> (1,139,790)
<TOTAL-LIABILITY-AND-EQUITY> 1,782,968
<SALES> 748,006
<TOTAL-REVENUES> 2,062,026
<CGS> 242,025
<TOTAL-COSTS> 1,041,601
<OTHER-EXPENSES> 384,596
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 312,770
<INCOME-TAX> (31,624)
<INCOME-CONTINUING> 344,394
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 344,394
<EPS-PRIMARY> .08
<EPS-DILUTED> 0
</TABLE>
