0001471242-11-000103.txt : 20110516
0001471242-11-000103.hdr.sgml : 20110516
20110516171007
ACCESSION NUMBER: 0001471242-11-000103
CONFORMED SUBMISSION TYPE: NT 10-Q
PUBLIC DOCUMENT COUNT: 1
CONFORMED PERIOD OF REPORT: 20110331
FILED AS OF DATE: 20110516
DATE AS OF CHANGE: 20110516
EFFECTIVENESS DATE: 20110516
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: NT 10-Q
SEC ACT: 1934 Act
SEC FILE NUMBER: 001-31238
FILM NUMBER: 11848344
BUSINESS ADDRESS:
STREET 1: 35 INDUSTRIAL PKWY
CITY: SOMERVILLE
STATE: NJ
ZIP: 08876
BUSINESS PHONE: 9085262828
MAIL ADDRESS:
STREET 1: 35 INDUSTRIAL PKWY
CITY: BRANCHBURG
STATE: NJ
ZIP: 08876-3518
NT 10-Q
1
hydint10q03312011.txt
HYDINT10Q03312011
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 12B-25
Commission File Number: 0-10683
NOTIFICATION OF LATE FILING
(Check one): ___ Form 10-K ___ Form 20-F ___ Form 11-K __X_ Form 10-Q ___
Form 10-D ___ Form N-SAR ___ Form N-CSR
For Period Ended: March 31, 2011
___ Transition Report on Form 10-K
___ Transition Report on Form 20-F
___ Transition Report on Form 11-K
___ Transition Report on Form 10-Q
___ Transition Report on Form N-SAR
For the Transition Period Ended:
Read attached instruction sheet before preparing form. Please print or type.
NOTHING IN THIS FORM SHALL BE CONSTRUED TO IMPLY THAT THE COMMISSION HAS
VERIFIED ANY INFORMATION CONTAINED HEREIN.
If the notification relates to a portion of the filing checked above, identify
the Items(s) to which the notification relates:
PART I - REGISTRANT INFORMATION
Full Name of Registrant: HYDROMER, INC.
Former Name if Applicable:
Address of principal executive Office (Street and number): 35 Industrial Parkway
City, State and Zip Code: Branchburg, NJ 08876
PART II - RULES 12B-25(b) AND (c)
If the subject report could not be filed without reasonable effort or expense
and the registrant seeks relief pursuant to Rule 12b-25(b), the following should
be completed. (Check appropriate box.)
_X_ (a) The reasons described in reasonable detail in Part III of this form
could not be eliminated without unreasonable effort or expense.
___ (b) The subject annual report, semi-annual report, transition report on
Form 10-K, Form 20-F, Form 11-K, Form N-SAR or Form N-CSR, or
portion thereof, will be filed on or before the fifteenth calendar
day following the prescribed due date; or the subject quarterly
report or transition report on Form 10-Q or subject distribution
report on Form 10-D, or portion thereof will be filed on or before
the fifth calendar day following the prescribed due date; and
___ (c) The accountant's statement or other exhibit required by Rule 12b-25(c)
has been attached if applicable.
PART III - NARRATIVE
State below in reasonable detail the reasons why Form 10-K, 11-K, 20-F, 10-Q,
10-D, N-SAR, N-CSR, or the transition report or portion thereof, could not be
filed within the prescribed time period. (Attach extra sheets if needed.)
The registrant is unable to file its Form 10-Q for the quarter ended March
31, 2011 by the prescribed date of May 16, 2011 due to not being able reach
terms with the mortgage holder on the financial covenants contained in the
Company's long term debt instruments. The debt obligations are fully being met
(is a performing loan to the mortgage holder), however as a result of the
year-to-date results, two covenants are not met. The registrant hopes that it
can negotiate a timely agreement so that they can file its Form 10-Q on or prior
to the prescribed extended date. Without any agreement, the entire mortgage
balance could be "callable" and classified as current.
PART IV - OTHER INFORMATION
(1) Name and telephone number of person to contact in regard to this
notification Robert Lee (908) 722-5000 (Name) (Area Code) (Telephone
Number)
(2) Have all other periodic reports required under Section 13 or 15(d) of
the Securities Exchange Act of 1934 or Section 30 of the Investment Company Act
of 1940 during the preceding 12 months or for such shorter period that the
registrant was required to file such report(s) been filed? If answer is no,
identify report(s).
_X_ Yes ___ No
(3) Is it anticipated that any significant change in results of operations
from the corresponding period for the last fiscal year will be reflected by the
earnings statements to be included in the subject report or portion thereof? _ X
_ Yes ___ No
If so, attach an explanation of the anticipated change, both narratively and
quantitatively, and if appropriate, state the reasons why a reasonable estimate
of the results cannot be made.
A net loss of $57,868 is being reported for the quarter ended March 31, 2011
($0.01 per share) as compared with a net loss of $206,416 ($0.04 per share) for
the corresponding period the year prior. (See the attached Consolidated
Statements of Operations, Consolidated Statements of Cash Flows and Management's
Discussions and Analysis.)
Hydromer, Inc
-----------------------------------------------------------
(Name of Registrant as specified in Charter)
has caused this notification to be signed on its behalf by the undersigned
hereunto duly authorized.
Date: May 16, 2011 By: /s/ Robert Y. Lee
Robert Y. Lee
Vice President, Chief Financial Officer
HYDROMER, INC. AND CONSOLIDATED SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended Nine months Ended
March 31, March 31,
2011 2010 2011 2010
UNAUDITED UNAUDITED UNAUDITED UNAUDITED
--------------------------------------------------------- ----------------------------- ------------------------------
REVENUES
Sale of Products $ 1,070,400 $ 845,734 $ 2,281,134 $ 2,856,840
Service Revenues 274,326 402,766 1,044,715 1,062,049
Royalties and Contract Revenues 206,316 226,668 687,210 681,964
------------- ------------ -------------- -------------
TOTAL REVENUES
1,551,042 1,475,168 4,013,059 4,600,853
------------- ------------ -------------- -------------
--------------------------------------------------------- ----------------------------- ------------------------------
EXPENSES
Cost of Sales 483,068 526,601 1,231,650 1,994,058
Operating Expenses 1,101,305 1,316,952 3,378,516 3,804,805
Other Expenses 58,961 56,973 157,523 138,611
Gain from Sale of Assets - - - (335,629)
(Benefit) from Income Taxes (34,424) (218,942) (243,856) (445,051)
------------- ------------ -------------- -------------
1,608,910 1,681,584 4,523,833 5,156,794
TOTAL EXPENSES
--------------------------------------------------------- ----------------------------- ------------------------------
NET LOSS $ (57,868) $ (206,416) $ (510,774) $ (555,941)
--------------------------------------------------------- ----------------------------- ------------------------------
Loss Per Common Share $ (0.01) $ (0.04) $ (0.11) $ (0.12)
Weighted Average Number of
Common Shares Outstanding 4,772,318 4,772,318 4,772,318 4,772,318
There was no impact to earnings per share from dilutive
securities as the resultant would have been anti-dilutive.
HYDROMER, INC. AND CONSOLIDATED SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine months Ended
March 31,
2011 2010
UNAUDITED UNAUDITED
-----------------------------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss $ (510,774) $ (555,941)
Adjustments to reconcile net loss to net cash used for
operating activities
Gain on Sale of Product Lines - (335,629)
Depreciation and amortization 303,122 318,126
Deferred income taxes (243,856) (421,417)
Changes in Assets and Liabilities:
Trade receivables 210,790 187,254
Inventory (53,416) 75,296
Prepaid expenses 600 9,611
Other assets 6,400 (18,402)
Accounts payable and accrued liabilities 69,511 67,118
Deferred income 94,864 17,114
Income taxes payable - (89,212)
-----------------------------------------------------------------------------------------------------
Net Cash Used in Operating Activities (122,759) (746,082)
-----------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash purchases of property and equipment (110,254) (175,486)
Cash payments on patents and trademarks (140,010) (251,389)
Redemption of matured short-term investments 440,000 700,000
Cash purchases of short-term investments - (690,000)
Proceeds Received from the sale of Product Lines - 800,000
-----------------------------------------------------------------------------------------------------
Net Cash Provided by Investing Activities 189,736 383,125
-----------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of long-term borrowings (38,526) (36,018)
-----------------------------------------------------------------------------------------------------
Net Cash Used in Financing Activities (38,526) (36,018)
-----------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS: 28,451 (398,975)
Cash and Cash Equivalents at Beginning of Period 843,610 1,585,765
-----------------------------------------------------------------------------------------------------
Cash and Cash Equivalents at End of Period $ 872,061 $ 1,186,790
-----------------------------------------------------------------------------------------------------
Non-Cash Investing and Financing Activities:
Note Receivable in exchange for Sale of Product Lines $ 400,000
MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
The Company's revenues for the quarter ended March 31, 2011 were $1,551,042,
$75,874 or 5.1% higher than the $1,475,168 for the same period the previous
year. For the nine month period ended March 31, revenues were $4,013,059 during
the 2011 year, as compared with $4,600,853 the year before or $587,794 lower
(12.8%). Revenues are comprised of the sale of Products and Services and Royalty
and Contract payments.
Product sales were $1,070,400 for the quarter ended March 31, 2011 as
compared to $845,734 for the same period the year before, a $224,666
(26.6%) increase: higher due to an increase in Dragonhyde(R) Hoof Bath
Concentrate sales of $232,636, primarily in Europe. The quarter ended
March 31, 2010 included $99,181 in transitional sales from the medical
device product lines sold in November 2009. For the nine month period
ended March 31, 2011, product sales were $2,281,134 as compared with
$2,856,840 or $575,706 (20.2%) lower than the same period the year before.
Sales from the divested product lines (including of the product lines sold
in April 2009 with its transition period carrying operations into October
2010) accounted for approximately $798,074 of the difference, offset by
$311,856 in higher Dragonhyde Hoof Bath Concentrates sales. The 2011
results would have been better had it not been for toll manufacturing
delays that prevented over $132,000 of additional sales from occurring in
March.
Services revenues, primarily contract coating services, for the three
months ended March 31, 2011 was $274,326 or $128,440 lower (31.9%) than
the $402,766 the corresponding period the year before, primarily timing
differences as overall, Services revenues for the nine months ended March
31, 2011 was $1,044,715 or $17,334 lower (1.6%) than the $1,062,049 the
corresponding period the year before.
Royalty and Contract revenues include royalties received and the periodic
recurring payments from license, stand still and other agreements other
than for product and services. Included in Royalty and Contract revenues
are revenues from support and supply agreements. Some of the royalties and
support fees are based on the net sales of the final item (to which the
Hydromer technology is applied to) and are subject to the reporting of our
customers. For the quarter ended March 31, 2011, Royalty and Contract
revenues were $206,316, compared to $226,668 the same period a year ago.
For the nine months ended March 31, 2011, Royalty and Contract revenues
were $687,210, compared with the previous year's $681,964. We continue
entering into new Royalty and Contract revenue agreements, some which
begin with our customer's first commercial sale of their product. Once
online, including with the commercialization of one of our hydrogel
technologies, we anticipate a doubling of this revenue line within the
next few years.
When excluding the revenues from the divested product lines, we are
reporting a 5.5% gain in total revenues this year's period; a 9.0% gain
had they not been any toll manufacturing delays in March 2011. We expect
continued revenue growth, particularly in our T-HEXX(R) Animal Health
business where a majority of our research and development during the past
two years has been focused upon.
Total Expenses for the quarter ended March 31, 2011 were $1,608,910 as compared
with $1,681,584 the year before, a 4.3% decrease. For the nine months ended
March 31, 2011, total expenses were $4,523,833 as compared with $5,156,794 the
same period the year before, or an improvement of 12.3%. Reducing expenses for
the nine months ended March 31, 2010 was the gain from the sale of product lines
of $335,629. When excluding the gain from sale of product lines, total expenses
for the nine months ended March 31, 2010 would have been $5,492,423 or with the
current period $968,590 (17.6%) better.
For the quarter ended March 31, 2011, the Company's Cost of Goods Sold was
$483,068 as compared with $526,601 the year prior, lower by $43,533 or
8.3%. The Cost of Goods Sold attributed to the sold product lines
approximated $5,171 in the March 2011 quarter as compared with
approximately $137,511 in the March 2010 quarter with the cost reduction
offset by the higher material Cost of Goods Sold from the increase in
[Dragonhyde] product sales revenues. The Cost of Goods Sold for the nine
month period was $1,231,650 or $762,408 better (38.2%) than the prior
year's $1,994,058, which included approximately $836,744 relating to the
divested product lines.
Operating expenses were $1,101,305 for the quarter ended March 31, 2011 as
compared with $1,316,952 the year before, lower by $215,647 or 16.4%. For
the nine month period, Operating expenses were $3,378,516 this year
compared with $3,804,805 the year before, an improvement of $426,289
(11.2%). Most of the reduction to Operating expenses related to a lower
staffing level, including in part due to the divestiture of the medical
device product lines, as offset by increases in marketing and sales
expenses in our T-HEXX Animal Health business (added tradeshow promotions
and related travel and marketing expenditures).
Interest expense, interest income and other income are included in Other
Expenses. Interest expense (on the mortgage) for the nine months ended
March 31, 2011 and March 31, 2010 were $149,037 and $152,823,
respectively. Included in Other Income for the 2010 period was the gain
from the sale of product lines of $335,629.
A net loss of $57,868 ($0.01 per share) is reported for the quarter ended March
31, 2011 as compared to a net loss of $206,416 ($0.04 per share) the year
before. For the nine months ended March 31, 2011, a net loss of $510,774 ($0.11
per share) is reported compared against a net loss of $555,941 ($0.12 per share)
for
the same period year before.
Despite sales being $587,794 lower this year-to-date, of which
approximately $798,074 was attributable to the sale of the medical device
product lines, expense reductions, including that beyond relating to the
sold product lines, totaled $632,961. When excluding the $335,629 gain on
the sale of product lines and its related tax expense, total expenses were
approximately $837,695 lower this year. The Company expects to continue
improvements to its results coming from increasing revenues with modest
increases to its expense base, primarily in expanded sales and marketing
costs, including that of new sales representatives.
Financial Condition
Working capital decreased $61,338 during the three months ended March 31, 2011
and $753,449 during the nine months then ended.
For the three months ended March 31, 2011, operating activities provided
$366,853 in net cash. For the nine month period ended March 31, 2011 net cash of
$122,759 was used.
The net loss, as adjusted for non-cash expenses of depreciation and
amortization and deferred income taxes, used $451,508 in cash. The net
change in other operating assets and liabilities provided $328,749 in
cash, with the primarily activities being the collection of trade
receivables and customer prepayments and increased accounts payable and
accrued expenses as offset by higher inventories, in part due to the toll
manufacturer delays.
Investing activities provided $189,736 and financing activities used $38,526
during the nine months ended March 31, 2011.
Investing activities for the nine months ended March 31, 2011 included
$110,254 for capital expenditures and $140,010 towards the Company's
patent estate. $440,000 in short-term investments matured and was
converted into cash. Reported under Financing activities was the repayment
of the principal portion of the mortgage.
For the quarter ended March 31, 2011, we were near break-even. This is a
tremendous turnaround following a $780,000 annual loss in support fees/cash
effective January 1, 2009 and an annualized $2 million+ loss in revenues (an
approximate loss of $400,000+ in pre-tax profits) related to the medical device
product lines sold in 2009. With a continued market penetration from our
recently introduced products and the medical coatings introduced years prior,
completing their [clinical] evaluations by our customers, we expect a return to
profitability soon.