-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, CAunYi9CsAbgrD0bt9b3yYBqetcGLyNe2q004370pBz5ZF8QXdFWxgLSBMVdOSvW zvxAQmzOGxG70/WPFT56JA== 0000950110-01-000117.txt : 20010214 0000950110-01-000117.hdr.sgml : 20010214 ACCESSION NUMBER: 0000950110-01-000117 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20001231 FILED AS OF DATE: 20010213 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HYDROMER INC CENTRAL INDEX KEY: 0000704432 STANDARD INDUSTRIAL CLASSIFICATION: PATENT OWNERS & LESSORS [6794] IRS NUMBER: 222303576 STATE OF INCORPORATION: NJ FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-10683 FILM NUMBER: 1536173 BUSINESS ADDRESS: STREET 1: 35 INDUSTRIAL PKWY CITY: SOMERVILLE STATE: NJ ZIP: 08876 BUSINESS PHONE: 9085262828 MAIL ADDRESS: STREET 1: 35 INDUSTRIAL PKWY CITY: SOMERVILLE STATE: NJ ZIP: 08876-3518 10QSB 1 0001.txt FORM 10-QSB ================================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON D. C. 20549 FORM 10-QSB QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the six months ended December 31, 2000 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 Industrial Pkwy, Somerville, 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( ) 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 December 31, 2000 -------------- ----------------------------------- 4,598,904 ================================================================================ HYDROMER, INC. INDEX TO FORM 10-QSB December 31, 2000
Page No. -------- Part I -- Financial Information Condensed Financial Statements Balance Sheets - December 31, 2000 & June 30, 2000 ...................... 2 Statements of Income for the three months and six months ended December 31, 2000 and 1999 .............................................. 3-4 Statements of Cash Flows for the six months ended December 31, 2000 and 1999 .............................................. 5 Notes to Financial Statements ........................................... 6 Management's Discussion and Analysis of the Financial Condition And Results of Operation ................................................ 7-9 Part II -- Other Information ...................................................... 10
1 HYDROMER, INC. BALANCE SHEETS
December 31, June 30, (UNAUDITED) (AUDITED) 2000 2000 - ------------------------------------------------------------------------------------------------------- ASSETS Current Assets: Cash and cash equivalents ................................................ $ 217,519 $ 18,239 Trade receivables less allowance for doubtful accounts of $10,484 for both periods .................................................... 899,311 1,000,239 Inventory ........................................................... 592,226 485,835 Other ............................................................... 60,112 33,574 Prepaid ............................................................. 114,464 131,264 expenses Deferred tax asset .................................................. 0 0 - ------------------------------------------------------------------------------------------------------- Total Current Assets .................................................... 1,883,632 1,669,151 Property and Equipment, net .............................................. 1,803,071 1,801,180 Patents, net ............................................................. 336,588 245,277 Trademarks ............................................................... 44,825 37,661 Other .................................................................... 0 0 Goodwill, net ............................................................ 513,152 505,338 - ------------------------------------------------------------------------------------------------------- $ 4,581,268 $ 4,258,607 ======================================================================================================= LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Accounts payable .................................................... $ 396,584 $ 470,294 Accrued expenses .................................................... 113,330 113,226 Current portion of mortgage payable ................................. 56,667 56,667 Other ............................................................... 0 0 Income tax payable .................................................. 2,666 10,160 - ------------------------------------------------------------------------------------------------------- Total Current Liabilities ................................................ 569,247 650,347 - ------------------------------------------------------------------------------------------------------- Deferred Tax Liability ................................................... 162,400 36,769 Long-term portion of mortgage payable .................................... 651,667 680,000 Long-term portion of deferred rental income .............................. 0 0 - ------------------------------------------------------------------------------------------------------- Total Liabilities ........................................................ 1,383,314 1,367,116 - ------------------------------------------------------------------------------------------------------- Stockholders' Equity Common stock - no par value, authorized 6,000,000 shares, issued and outstanding, 4,598,904 shares ............................... 3,608,118 3,608,118 Contributed capital ................................................. 577,750 577,750 Accumulated deficit ................................................. (981,774) (1,288,237) Cash Dividends paid ................................................. 0 0 Treasury stock, 10,917 common shares at cost ........................ (6,140) (6,140) - ------------------------------------------------------------------------------------------------------- Total Stockholders' Equity ............................................... 3,197,954 2,891,491 - ------------------------------------------------------------------------------------------------------- $ 4,581,268 $ 4,258,607 =======================================================================================================
2 HYDROMER, INC. STATEMENTS OF INCOME Three Months Ended December 31, 2000 ------------------------------ 2000 1999 UNAUDITED UNAUDITED - -------------------------------------------------------------------------------- REVENUES: Product sales and services ................ $ 1,022,259 $ 202,575 Royalties, options and licenses Fees ...... 601,459 521,552 - -------------------------------------------------------------------------------- 1,623,718 724,127 Cost of Product Sales .......................... 439,675 61,062 - -------------------------------------------------------------------------------- Gross profit .......................... 1,184,043 663,065 Selling, General and Administrative ............ 877,720 540,136 - -------------------------------------------------------------------------------- Operating Income ...................... 306,323 122,929 Interest Income ................................ 4,531 14,076 Interest Expense ............................... (15,412) (15,661) Other Income ................................... 1278 (255) - -------------------------------------------------------------------------------- Income before provision for income taxes ................................ 296,720 121,089 Provision for Income Taxes Expense ............. 107,352 37,000 - -------------------------------------------------------------------------------- Net Income ............................ $ 189,368 $ 84,089 ================================================================================ Income Per Common Share ............... $ 0.041 $ 0.018 ================================================================================ Dividends paid, per share ............ $ 0.00 $ 0.03 ================================================================================ Weighted Average Common Shares Outstanding ..... 4,598,904 4,598,904 ================================================================================ 3 HYDROMER, INC. STATEMENTS OF INCOME Six Months Ended December 31, 2000 ------------------------- 2000 1999 UNAUDITED UNAUDITED - -------------------------------------------------------------------------------- REVENUES: Product sales and services................... $ 1,751,988 $ 314,766 Royalties, options and licenses Fees ........ 1,153,319 1,152,848 - -------------------------------------------------------------------------------- 2,905,237 1,467,614 Cost of Product Sales ............................ 734,822 131,110 - -------------------------------------------------------------------------------- Gross profit ............................ 2,170,355 1,336,504 Selling, General and Administrative .............. 1,692,921 1,062,455 - -------------------------------------------------------------------------------- Operating Income ........................ 477,434 274,049 Interest Income .................................. 6,570 30,921 Interest Expense ................................. (30,632) (31,784) Other Income ..................................... 1378 (97) - -------------------------------------------------------------------------------- Income before provision for income taxes .................................. 454,750 273,089 Provision for Income Taxes Expense ............... 148,287 88,794 - -------------------------------------------------------------------------------- Net Income .............................. $ 306,463 $ 184,295 ================================================================================ Income Per Common Share ................. $ 0.067 $ 0.04 ================================================================================ Dividends paid, per share ............... $ 0.00 $ 0.03 ================================================================================ Weighted Average Common Shares Outstanding ....... 4,598,904 4,598,904 ================================================================================ 4 HYDROMER, INC. STATEMENTS OF CASH FLOWS
Six Months Ended December 31, 2000 1999 - -------------------------------------------------------------------------------------------------------------------- UNAUDITED Unaudited - -------------------------------------------------------------------------------------------------------------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net Income ...................................................................... $ 306,463 $ 100,206 Adjustments to reconcile net income to net cash provided by operating activities Depreciation and amortization ................................................. 36,874 28,412 Deferred rental income ........................................................ 0 (28,113) Changes in Assets and Liabilities Trade receivables ........................................................... 100,928 (111,488) Inventory ................................................................... (106,391) (7,605) Prepaid expenses ............................................................ 16,800 (2,351) Deferred tax asset .......................................................... 0 38,000 Other assets ................................................................ (125,013) (36,778) Accounts payable and accrued liabilities .................................... 52,025 (42,166) Income taxes payable ........................................................ (7,494) (37,956) - -------------------------------------------------------------------------------------------------------------------- Net Cash Provided by (Used in) Operating Activities ..................... 274,192 (99,839) ==================================================================================================================== CASH FLOWS FROM INVESTING ACTIVITIES: Cash purchases of property and equipment ........................................ (38,765) (49,000) Cash paid for goodwill and assets of Biosearch .................................. (7,814) - -------------------------------------------------------------------------------------------------------------------- Net Cash Provided by (Used in) Investing Activities ..................... (46,579) (49,000) - -------------------------------------------------------------------------------------------------------------------- CASH FLOWS FROM FINANCING ACTIVITIES: - -------------------------------------------------------------------------------------------------------------------- Cash dividends paid ........................................................... 0 (137,967) - -------------------------------------------------------------------------------------------------------------------- Repayment of borrowings ....................................................... (28,333) (14,167) - -------------------------------------------------------------------------------------------------------------------- Net Cash Provided by (Used in) Financing Activities ..................... (28,333) (152,134) - -------------------------------------------------------------------------------------------------------------------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS: ................................ 199,280 (300,973) Cash and Cash Equivalents at Beginning of Year ....................................... 18,239 1,270,295 - -------------------------------------------------------------------------------------------------------------------- Cash and Cash Equivalents at End of Period ........................................... $ 217,519 $ 969,322 ====================================================================================================================
5 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. 6 MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations The Company's revenues for the quarter ended December 31, 2000 were $1,623,718 as compared to $724,127 for the same period last year, or an increase of 124.2%. Revenues for the six-month period ending December 31, 2000 were $2,905,237 as compared to the $1,467,614 recorded for the same period last year, an increase of 98%. Revenue is comprised of: Royalty, license and option revenue from patented products grew to $601,459 for the quarter, up 15.3% from 521,552 over the same period last year. This growth is attributed to client's increased sales of their products, including our T-HEXX(R) products. One new licensee has been added, Kleencare Hygiene for our T-HEXX(R) Oro(TM) product for manufacture AND distribution in Western Europe. The Company is also selling T-HEXX(R) products in Europe ex-US, and is seeking to builD a network of regional distributors. The Company recently completing negotiations with a distributor for T-HEXX(R) products in Hungary, Slovakia and the Czech Republic. IMED Pharma has extended their development agreement for the Aquatrix hydrogel technology until July 2001. The company is currently collaborating with potential clients for exclusive and non-exclusive licensing opportunities, in addition to expanding its coating services operation through the Biosearch subsidiary. Product, service and technology sales were $1,022,259 for the quarter ended December 31, 2000 as compared to $202,575 for the same period last year, an increase of 405%. This increase includes $688,635 for the quarter ending December 31, 2000 in revenue through the Biosearch Medical Products subsidiary. Product, service and technology sales were $1,751,988 for the six-month period ended December 31, 2000 as compared to $314,766 for the same period last year, an increase of 457%. This increase includes $1,153,908 for the six-month period ending December 31, 2000 in revenue through the Biosearch Medical Products subsidiary. Biosearch did not report results for the period ended 12/31/99 due to the impending acquisition by Hydromer. The Company's gross profit was up 78.6% to $1,184,043 for the quarter ended December 31, 2000 from $663,065 recorded for the same period last year. The Company gross profit for the six-month period ended December 31, 2000 was up 62.4% to $2,170,355 from $1,336,504 recorded for the same period last year. Gross Profit for the Biosearch subsidiary, included in the Company total for the quarter ending December 31, 2000, was $399,928. Gross Profit for the Biosearch subsidiary, included in the Company total for the six-month period ending December 31, 2000 was $621,318. The Gross Profit percentage on revenue was 74.7% for the quarter ended December 31, 2000 as opposed to 90.4% for the same period last year. This decrease reflects the increase in product sales related to the Biosearch subsidiary versus the largely royalty based revenues of the Hydromer operations. Royalty income is included in gross profit at 100%. Operating income for the period ending December 31, 2000 increased 149% to $306,323 from $122,929 for the quarter ended December 31, 2000. Operating Income for the six-month period ended December 31, 2000 increased 74.2% to $477,434 from $274,049 for the same period last year. The Biosearch Medical Products subsidiary contributed $169,145 in Operating income for the quarter ended December 31, 2000 and $ 209,909 for the six-month period ended December 31, 2000. SG&A and R&D expenses increased to $877,720 in the quarter ended December 31, 2000 from $540,136 for the same period last year. SG&A and R&D expenses increased to $1,692,921 in the six-month period ended December 31, 2000 from $1,062,455 for the same period last year. These increases reflected the operating costs of the combined Hydromer and Biosearch operations. Management continues to look to improve synergies of the two operations to grow the respective businesses, control costs and improve the operating margin. 7 Income before taxes for the quarter ended December 31, 2000 was $296,720 from prior year's results of $121,089 for the same quarter last year, or an increase of 145%. Income before taxes for the six-month period ended December 31, 2000 was $454,750, up 66.5 % from the $273,089 recorded for the same period last year. Interest income was down to $4,531 for the quarter ending 12/31/00 versus $14,076 for the same period last year. Interest income for the six-month period was down to $6570 versus $30,921 reported for the same period last year. This reduction reflects the use of cash to purchase the Biosearch Medical Products operation. Increases sales by the combined operation, coupled with more efficient resource utilization of the combined operation has resulted in significant improvements in EBIT, and a steady replenishment of cash. Net income was $189,368 for the quarter ended 12/31/00, an increase of 125% over $84,089 recorded for the quarter ended 12/31/99. Earnings for the six-month period ending 12/31/00 were $306,463 versus $184,295, or an increase of 66.3% reported for the same period last year. The tax provision for the quarter ended 12/31/00 was $107,352, up from $37,000 or up 190% versus the same period last year. For the six-month period ended 12/31/00, the tax provision was $148,287, up from $88,794 or up 67% versus the same period last year. The cost savings initiatives implemented by management, improvement in the overall business, and synergies of the combined operations has resulted in significant improvements in Net income for the combined operations. Earnings per share were $0.041 for the quarter ended December 31, 2000, up 127.8% over the $0.018 recorded the same period last year by Hydromer on a stand-alone basis. EPS were $0.067 for the six-month period ended 12/31/00 versus $0.04 reported for the same period last year by Hydromer on a stand-alone basis. Biosearch did not report earnings for the same quarter last year due to the impending acquisition. Management believes that it has made significant improvements in improving the overall business and operational efficiencies, reducing the previously negative financial impact of the Biosearch operation on the Company. 8 Financial Condition Working capital increased $199,280 for the six months ended December 31, 2000. Management believes that its current working capital, along with expected income and expense streams, are sufficient to maintain its current level of operations. Net operating activities generated $274,192 during the first six months. The major factors contributing to the increase in cash were decreases in accounts receivable of $100,928; prepaid expenses of $16,800; depreciation of $36,874 (a non-cash item); net income of $306,463 and increases in accounts payable and accrued liabilities of $52,025 due to the borrowing of $50,000 from a credit line with New Millennium Bank offset by increases in other assets of $125,013; and inventory of $106,391. A large portion of accounts receivable is made up of royalty income, which is accrued monthly and paid quarterly by licensees. Payments normally are paid in the beginning of the following quarter. Balances due on federal and state taxes were paid during the first quarter along with requests for extensions to file. Estimated taxes on current year's income are accrued each month and deferred until fiscal year end. Investing activities used $46,579 on capital expenditures during the first six months and financing activities used $28,333 to pay down the Company's mortgage. The Company made capital purchases amounting to $38,765, while goodwill increased due to charges from the Bank of New York, who acted as the Company's agent in the acquisition of Biosearch. Those charges amounted to $16,000. 9 PART II -- Other Information The Company currently has two facilities located in New Jersey. The manufacturing and quality assurance 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 Columbia Rd. facility that ends August 31, 2001. In June 1998, the company purchased the 25,200 sq. ft. building and 6.4 acres of land at 35 Industrial Parkway for expansion. The new facility is secured by a mortgage with a bank and is partially occupied by Biosearch Medical Products, Inc., the prior owner of the facility and an affiliated party The Company's lease at 35 Columbia Rd. is up in August 2001 and it has reached an agreement with New Millennium Bank by which the bank will fund a $1,000,000 addition of 10,400 sq. ft. to the Company's building at 35 Industrial Parkway to be completed by late July 2001. This will allow for consolidation of all Company operations at the Industrial Parkway site, with upgraded manufacturing facilities and expansion space. Savings from the leasing of the Columbia Road facility will offset the increase in mortgage. Along with the funding of the addition, the bank has also agreed to a $200,000 line of credit. The Company feels that with the addition, the facilities will be adequate for the Company's operations for the foreseeable future. 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 December 31, 2000 10 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/ ROBERT C. KELLER --------------------------------- Robert C. Keller Principal Accounting Officer DATE: February 13, 2001 11 EX-27 2 0002.txt HYDROMER FINANCIAL DATA SCHEDULE
5 12-MOS JUN-30-2001 OCT-01-2000 DEC-31-2000 217,519 0 899,311 0 592,226 1,883,632 4,714,104 2,911,833 4,581,268 569,247 0 0 0 3,608,118 (410,164) 4,581,268 1,623,718 1,623,718 439,675 439,675 877,720 360,323 15,412 296,720 107,352 0 0 0 0 189,368 0.04 0.04
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