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 purposes of developing polymeric
complexes for commercial use in the medical, commercial, cosmetics and animal health markets.
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. (“BMPI”), which in turn was controlled by Manfred Dyck, who is the Company’s current Chief Executive
Officer, Director and the Chairman of the Board. On September 16, 1982, BMPI distributed its shareholdings in the Company pro rata
to the holders of its common stock. In connection with this distribution, the Company granted to BMPI an exclusive, worldwide,
perpetual, royalty-free license for the use of Hydromer technology in connection with the development, manufacture and marketing
of biomedical devices for enteral feeding applications. On February 4, 2000, the Company acquired all outstanding stock of BMPI
for $0.20 per share, and now manages BMPI as a subsidiary.
The Company owns several process and applications
patents for Hydromer
®
coatings (“Hydromer”). These polymers become extremely lubricious (slippery) when
wet. Techniques have been developed for grafting or applying this substance onto a broad variety of materials, including other
polymers like polyurethane, polyvinyl chloride, and silicone elastomers, ceramics and metals. The Company has also been issued
patents for permanent anti-fog materials, hydrophilic polyurethane foams, hydrophilic polyurethane blends, hydrophilic polyvinylbutyral
alloys, several biocompatible hydrogels and an anti-bacterial medical material. The Company continues to actively evaluate other
new market opportunities for its polymer technology specifically in neurology and cardiology.
The Company also owns various trademarks, including
AQUAMERE
®
, a cosmetic intermediate with water resistant film forming properties; AQUATRIX
®
, a cosmetic
hydrogel; BIOSEARCH
®
, medical device product lines; Dermaseal
®
, a dermal barrier film product for
the prevention of contact dermatitis; DRAGONHYDE
®
, hoof enhancement products; HYDROMER
®
, hydrophilic
and hydrophobic coatings; Sea-Slide
®
, a coating for watercraft hulls; and T-HEXX
®
, a barrier teat
dip product group for the prevention of mastitis in dairy animals.
The Company’s patents are typically broad
based, having a multitude of different applications across various industries. Accordingly, the Company currently operates in the
medical, commercial, cosmetics and animal health markets.
MEDICAL
From its inception in 1980 to mid-1984,
the Company was primarily engaged in R&D activities related to Hydromer
Coating used on medical
devices. Since then and until the acquisition of BMPI, the Company’s business in the medical field consisted of the
sale of lubricious coatings and the licensing of its lubricious coating technologies. With the acquisition of BMPI in
February 2000, the Company was able to offer a horizontally integrated breadth of services including medical device
manufacturing, contract coating, equipment building and design, and R&D servicing. However, in 2009, the Company sold
most of its OEM medical device product lines in order to focus on its coatings technologies, effectively exiting the OEM
medical device manufacturing business.
The Company’s coatings technologies include
its hydrophilic lubricious coatings, biostatic/anti-microbial coatings, cell anti-mitosis and anti-thrombogenic coatings and more
recently, cell adhesion promoting coatings. During the fiscal year ending June 30, 2009, the Company launched two new coatings:
a cell adhesion promoting coating and our third generation anti-microbial coating.
HYDROMER Coatings: Lubricious / Anti-microbial
/ Anti-thrombogenic / Cell mitosis / Cell Adhesion
When treated with a Hydromer lubricious
polymer, a medical device becomes very slippery when wet, allowing for easy insertion into any orifice of the body, in penetration
of the skin or for device-on-device (i.e. guidewire-catheter) use. Hydromer coatings are permanently bonded to the device unlike
silicone lubricants, which must be applied after each use and are often left behind in the bloodstream and body cavities. Hydromer
coatings can also be coated on complex surfaces and on the inside walls of devices, unlike the treatments by major competition.
The Company believes that the polymer-water interface of its Hydromer coatings provides surface lubricity superior to the quality
of other currently marketed silicone-based lubricants to treat medical devices.
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Drugs and other substances can be readily incorporated
into Hydromer coatings, both in a bound and unbound fashion, allowing for controlled release from the device for therapeutic purposes
or the creation of permanent biocidal or biostatic surfaces (anti-microbial coatings).
Certain Hydromer coatings have been shown in
numerous studies to reduce the risk of thrombogenesis or clot formation on devices. Such anti-thrombogenic coatings can be applied
to cardiovascular stents, oxygenators, blood warmers, hemodialysis equipment, intravenous catheters and much more.
In 2006, the Company introduced new technology
on its cell anti-mitosis coatings which decreases cell proliferation and cell adhesion and prevents platelet adhesion. This coating
appears to have the attributes needed for a cardiovascular stent to combat restenosis and late stage thrombosis. In vitro (lab)
studies have yielded positive results. Leveraging on this new technology, the Company developed a coating that promotes cell proliferation,
but better epithelization.
The Company recently entered into a Research
and License Agreement on its new Cell Adhesion coating. It is being evaluated for use on cardiovascular absorbable devices.
Stand-still and License/Supply and Support
Agreements
A portion of the Company's revenues is
derived from stand-still and license agreements. Stand-still agreements provide customers the right for a finite 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 stand-still agreements can also provide the customers the right to subsequently enter into
a license or supply and support agreement with the Company and to market the product(s) treated with Hydromer, which typically
provides the Company an initial flat fee, followed by periodic royalty payments or support fees based on sales.
Supply and Support Agreements
In order to avail our customers of a continued
material source or technical support on our products, certain supply or support agreements may be entered into. Depending on the
specific requirements of each agreement, the Company would provide continued support in terms of product availability or technical
know-how.
As of June 30, 2012, the Company has supply
and support agreements with 30 companies covering the application or availability of Hydromer coatings to the following devices:
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angioplasty balloon catheters,
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biliary and pancreatic stents,
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cardiovascular implantables,
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cardiovascular microcatheters,
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central venous catheters,
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embolization delivery devices,
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enteral feeding products,
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female contraceptive devices,
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guiding and umbilical catheters,
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infusion microcatheters,
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inter/intra-ocular lenses,
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intra-occular lense inserts,
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neurovascular microcatheters,
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certain urological devices, and
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certain vascular devices.
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The Company is actively seeking new licensing
opportunities and/or supply and support agreements.
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Hydrogels,
Drug Delivery, Wound Dressing
Applications of the Company’s hydrogels
for wound care, implants, drug delivery, burn care, ultrasonic couplants and cosmetic uses are available but not yet commercialized.
The Company’s hydrogel technology offers
biocompatibility, flexibility, and ease of use and processing. It also allows for the stabilization of biomolecules, cell cultures,
drugs and other active substances without potentially damaging external energy sources. It is absorbent, inherently self-adhesive
but peels away cleanly and is naturally soothing. Other than our bio-adhesives and medical coatings, which are one-part systems,
to form the gel entails simply to mix the two parts together: no heat, no chemical cross linkers or expensive high energy processing
is required. Many competitive technologies are much more process intensive and require external energy to crosslink. The Company
believes these products are synergistic to our existing hydrogel technologies, and offer further opportunities in internal and
topical actives delivery. The Company has a pilot coating machine to facilitate the commercialization of its hydrogel technologies.
The Company is exploring other medical and dental as well as cosmetic applications for this technology.
The Company has 510K notices to the FDA on
its hydrophilic polyurethane foam technology for medical use applications in the U.S. as well as a patent on its chitosan-PVP hydrogel
technology.
Following two years of development and human
clinical studies, it is expected that one of the Company’s Hydrogel technologies will soon be ready for market. It currently
is in the final stages of FDA review.
OEM Medical Devices
The Company offers 510K/CE marked medical devices
on an OEM basis and private label through its ISO 13485:2003 certified and FDA registered Biosearch Medical Products subsidiary.
Most recently, the Company produced bipolar coagulation probes; placement catheters, biliary stents; jejunal and enteral feeding
accessories; guidewires; biofeedback devices for fecal and urinary incontinence; and other endoscopic accessories. The bipolar
coagulation probe and biliary stent product lines were sold to Merit Medical System, Inc. in 2009, and in 2010, the Company completed
the transition period of its sales of the Jejunostomy Catheter and Nasogastric Feeding Catheter business to Forefront Medical Technology
(PTE) Ltd. Currently remaining is its biofeedback business.
HYDROMER Coating Services
The acquisition of BMPI in 2000 allowed
for the Company to realize another source of revenues: Coating Services. Utilizing the acquired medical device manufacturing know-how
and by applying its coatings technologies, the Company began offering coating services, in which the Company coats third-party
devices with its Hydromer coatings. The Company’s knowledge in coatings technologies allows it to coat various types of material,
such as silicone, stainless steel, Pebax and polypropylene cost effectively, whereas some of the competition is unable to. Global
customers are using this service in the urology, cardiology and neurovascular markets.
The Company continues to expand its activity
in coating services and is actively seeking new opportunities to provide contract development, coating and manufacturing services
to the medical, commercial and personal care industry, utilizing its Hydromer and Anti-Fog coating technology and expertise. The
Company further continues to believe that these services will enable a broader range of customers to use our materials in markets
on accelerated timelines in a more cost effective manner.
R&D and Engineering Services
The medical device market continues to
undergo a shift toward consolidation by very large multi-national players with small, entrepreneurial start-up companies looking
to exploit niche opportunities or unique device designs. The Company’s experience and knowledge can significantly speed development,
assessment and market readiness for our clients, large and small, through its research and development and engineering services.
The Company believes that offering prototyping,
process development and small-medium scale coating/ manufacturing services is fundamental to the expansion of the Hydromer coatings
business, and a strategic imperative. The Company will endeavor to become a “one stop” supplier of high performance
coatings and services.
4
The Company also has anti-microbial testing
capabilities in-house to perform crucial first developments on the performance of colonization control medical coatings, cosmetic
intermediates and mastitis control products in the T-HEXX Animal Healthcare division (see Animal Health).
INDUSTRIAL/COMMERCIAL
Hydromer Anti-Fog/Condensation
Control is an optically clear coating which prevents the accumulation of vision-obscuring condensation under high humidity conditions.
The Company is selling this material to manufacturers of greenhouse panels, refrigerator freezer doors, industrial and medical
safety and swim goggles, aircraft windows, automotive headlight assemblies and gauge and meter manufacturers in the U.S. and internationally,
including China. The Company also has
food grade Anti-Fog coatings formulated with materials that are generally recognized
as safe for food contact as confirmed by independent laboratory extraction testing.
The Company also offers a Sea-Slide
coating
that reduces friction between the hull and water, and can be used over most anti-fouling paints. Independent testing has confirmed
that this technology significantly improves fuel economy and the hull speed of watercraft. Sea-Slide products were marketed through
HammerHead Products, Inc. until 2010 when the Company re-attained its distribution rights.
COSMETICS
The Aquamere series of the Company’s
cosmetic intermediaries are sold to major cosmetic companies worldwide for use in hair dyes, hair conditioners, mascaras, eye shadows,
sunscreens and body lotions. They are currently in test for use in shampoos, hair styling aids, OTC dermal drug delivery and topical
disinfectants. The Aquamere series of cosmetic polymer solutions, introduced in 1988, are both aqueous and hydro-alcoholic based
systems. They are also offered with cationic and silicone grafted modifications. Formulations have also been developed internally
utilizing this technology and are being offered for sale as turnkey products to smaller marketers of personal care products.
The Company’s Dermaseal line, a patented
film-forming hydrogel technology, is currently being sold to major cosmetic companies as a base for foundations and other skin
care products. It is also being tested for use in broader skin care, cosmetic and OTC drug delivery. Dermaseal is the registered
trademark for barrier film compositions, patented in fiscal 2000 along with the method for preventing contact dermatitis. Clinical
testing has demonstrated that these compositions protect the user from the effects of contact with poison ivy, oak or sumac plant
allergens. Technical testing has also demonstrated protection from latex proteins, nickel and other contact allergens.
Changes in the regulatory environment, including
that of the European requirements of REACH (Registration, Evaluation and Authorisation of Chemicals), can adversely impact the
marketability of existing cosmetics and other products. It is the Company’s intention to meet any changes to regulatory requirements,
including reformulating where necessary.
ANIMAL HEALTH
The Company’s polymer technology
was used to launch the Company’s entry into the animal health field to combat clinical and sub-clinical mastitis, a problem
that costs U.S. dairy farmers an estimated $2 billion per year, and farmers worldwide an estimated $5 billion. Barrier dips and
sprays utilizing
T-HEXX
technology offered dairy farmers exceptional value and unsurpassed protection as
the
first
no-drip and water resistant barrier products on the market preventing
water containing mastitis-causing
organisms, including mycoplasma, from reaching the inner teat surface. The Company has received three patents for its unique barrier
teat dip compositions with an application on a fourth patent pending.
5
The
annual U.S. market for
barrier teat dips is estimated to be $100-130 million at the farm level. Barrier products containing
T-HEXX
technology
have protocol-proven active ingredients that kill mastitis-causing bacteria on contact while continuing to remain active up to
12 hours
.
They are superior performers in this niche market, while priced comparably to or less than barrier dip
products manufactured by the leading sanitary chemical companies in the world. Our products are compatible with existing mechanical
equipment and milking procedures and most importantly, are easily removed using traditional
pre-milking methods.
Based on field tests, our product has been demonstrated to stay on the cow teat better than the competition, protecting the cow
during the complete 8-12 hour milking cycle.
The Company offers a complementary product,
T-HEXX
DRY External Teat Protection Sealant, to protect cows during the non-lactation (“dry cow”) period.
T-HEXX
DRY is used as a non-irritating low-cost sealant during the dry-off and the critical pre-calving period where it is estimated that
over 50% of new mastitis cases are believed to start.
T-HEXX
DRY is the first dry cow dip product with an anti-microbial
that remains on the teat for 3-7 days. Clinical studies show that
T-HEXX
DRY is impervious to National Mastitis Council
(NMC) recognized mastitis-causing organisms for seven days, yet is comparably priced to existing dry cow teat sealants that do
not offer such protection. Our product is suggested to be used on cows just prior to their release to the dry cow pen, in conjunction
with existing antibiotic therapy or internal teat sealants. Our
T-HEXX
DRY product is also sold under private-label, reflecting
the strength of the product.
In fiscal 2009, the Company launched a T-HEXX
DRY external teat sealant for organic dairies: T-HEXX DRY
Green-S
with natural actives.
The Company also launched a new product line of T-HEXX Syrup concentrated post-milking barrier teat dips
which
requires just a blending with water, reducing logistics and shipping costs to our customers, while maintaining the superior performance
that existing T-HEXX products provide.
During
fiscal 2010, the Company launched T-HEXX DRY Naturel
TM
External Teat Sealant, a triclosan-free external teat sealant
for dry cows, Sani-Spray
TM
non-barrier dips and sprays and Dragonhyde
®
Hoof Bath Concentrate (“Dragonhyde
HBC”). Dragonhyde HBC competes against Copper Sulfate and Formalin in hoof baths yet it does not contain such heavy metals
or carcinogenic products. An independent clinical study conducted by Cornell University and published in the August 2010 edition
of the
Journal of Dairy Science
concluded that Dragonhyde HBC outperformed typical Copper Sulfate and Formalin usage. A
complementary dissolvable hoof bath powder, Dragonhyde DUST is being launched in the winter/fall of 2012.
The
Company has invested significantly in clinical research, patents, promotion, vendor partnerships and advertising via print media,
trade shows and the Internet to support this business and continues to do so: both domestically as well as abroad. New products
continue to be developed.
Products
Coating solutions for use on medical
devices, cosmetic intermediaries, hydrogels and teat barrier dips/sprays are manufactured and sold by the Company to its customers.
The Company is selling anti-fog solutions to manufacturers of greenhouse panels, refrigerator freezer doors, swim goggles, industrial
safety equipment, aircraft windows and meter covers, both in the U.S. and foreign countries. Until 2010, the Company also sold
OEM medical devices through its Biosearch Medical Products subsidiary.
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 its revenues from
two primary business segments: (1) polymer research and the products derived there- from, and (2) medical products. The Company
does not have any significant customer concentration.
Potential Applications
The Company continues to explore other
applications of the complexing capabilities of polymeric substances, such as anti-microbial agents. The Company currently is working
on further applications of its patented technologies to existing products of other companies, including cosmetics, wound dressings,
personal care and a wide variety of medical devices, including vascular stents. Some of these products and applications are in
the preliminary development stage and are subject to substantial further development before their feasibility can be verified.
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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.
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Low Coefficient of Friction
. Hydromer is a hydrophilic coating which when contacted
by water become 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:
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urinary
products - urethral catheters, stents 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 related products - grafts, cardiac assist catheters heart-lung tubing, stents.
2.
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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
anti-microbial barrier. The Company believes that this unique feature would lend itself to application on a wide variety of currently
marketed medical products, including vascular stents, foley catheters, wound drains, wart and corn dressings, burn dressings,
intravenous catheters, surgical dressings and adhesive bandages. One of the Company’s patents in the coating area, issued
in April 2000, involves the covalent bonding of infection resistant materials into the coating, providing a non-leaching, anti-infective
surface.
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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. This anti-fog product
has use on greenhouse panels, refrigerator freezer doors, sports goggles, windows, mirrors and other products, either by direct
application or by coating of an adhesive backed film.
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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, either for its own account, jointly with another company
or strictly as a sub-contractor. The Company sponsors all of such activities from its own internal funding or through charges to
the contracting company. The major portion of R&D expenses was applied toward salaries and other expenses of personnel employed
on a regular basis in such work.
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 currently owns various process
and applications patents for Hydromer coatings (see "Patents and Trademarks"). Although the medical products market is
highly competitive, the Company does not believe that there is any other product available which performs functions significantly
better in terms of lubricity, complexing capabilities, durability and cost.
While management believes the Company has a
strong 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 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.
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Marketing
The Company markets its products and
services through five principal means:
1.
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Commercialization of its existing technologies:
The Company intends to expand
its efforts to market its current technology to the medical, industrial, personal care and animal health markets. The Company
has expanded its capabilities to prototype and manufacture for customers to demonstrate the value of Hydromer technology. The
Company will also seek opportunities to apply its technology in new applications where the technology will offer a benefit. Further,
the Company will seek customers for technologies that have been developed but are not currently generating revenue, capitalize
on the technology that has been created through its R&D efforts and expand the application of current technologies.
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Sale of Development Services:
The Company intends to continue moving its effort
away from straight technology licensing and toward contract product development, contract manufacturing, supply and support arrangements
and coating services (see “5. Coating Services”). The Company has significant expertise in polymer development and
applications. By exhibiting at an increased number of trade shows in the medical device fields, the Company expects to generate
interest in its technology and products, with a view toward acting as an outside product development arm and development supplier
for companies in these fields.
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Joint Development:
The Company will continue to seek joint development programs,
co-marketing programs and other business arrangements with potential partners.
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4.
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Licensing/Support Services:
The Company will continue its endeavors to license
or make available 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 and hydrogel technology under its patents. In return, the Company generally would earn
royalties/support fees based on sales of such treated or new products. Such agreements will usually be very narrow. The activities
leading to the consummation of an 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. A stand-still
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 defined time period. During such period, the customer 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 support agreement
with the Company, through the Company’s Contract Coating unit or it may have a third party perform the Hydromer coating
treatment.
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5.
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Coating Services:
The Company will serve the customer who needs products coated
with lubricious or anti-fog coatings in production runs that are economically feasible without substantial investments in fixturing
and automation. Typically this would be prototypes or runs of low volume, high value products. Higher volume products could be
accommodated if they were physically small and did not require extensive fixturing or because for technical reasons they could
not be automated and were of high enough value to warrant the added cost. The Company will pursue large volume projects if they
fall within a technical area where the Company has particular expertise.
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Business segments in Coating Services which
are of particular interest include medical devices (catheters and guidewires) and transparencies (lenses, face shields). Contacts
will be pursued in conjunction with marketing of Hydromer coatings, at trade shows, in mass mailings and advertisement in appropriate
trade publications. The Company is continually upgrading its advertising copy and promotional literature as needed to graphically
highlight the properties and advantages of its technologies.
The same marketing tools (traditional means
of tradeshow contacts, mass mailings, advertising, promotional activities, etc.) as well as alternative methods (such as the Internet)
are used by the Company in its focus of expanding sales globally to the medical, commercial, personal care and animal health community.
8
Patents and Trademarks
As of June 30, 2012, the Company has
six U.S. patents, two U.S. applications and various foreign counterparts. The Company’s existing patents and patent applications
cover hydrophilic coatings and foams, hydrophilic polymer blends, anti-bacterial medical and cosmetic materials, non-leaching biostatic
coatings, barrier film and barrier teat dip and hoof bath compositions and Chitosan gels and others.
The Company owns the registered trademarks
“Aquamere”, “Aquatrix”, “Biosearch”, “Dermaseal”, “Dragonhyde”, a dragon
logo, "Hydromer", “Sea-Slide” and “T-HEXX” in the United States and other countries.
Employees
As of June 30, 2012, the Company and
its subsidiary had thirty-six active full-time employees. The Chief Executive Officer is Manfred F. Dyck, who is also Chairman
of the Board. The Company does not have a collective bargaining agreement with any of its employees and considers its relationship
with its employees to be very good.
Government Regulations
The uses of the Company's medical, animal
health and cosmetic 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 support agreements,
it is generally the obligation of the customer to conform to any required FDA pre-market notification or other regulations. To
the Company's knowledge, all such customers who are marketing medical products are in such compliance. The Company expects to market
additional applications of Hydromer’s technologies to existing products, or products introduced by it, which may be subject
to such FDA review and/or foreign regulatory agencies’ 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 support agreements, to require the customers to obtain such approvals.
The Company contract coats medical products
through its Biosearch Medical Products subsidiary (“Biosearch”), whose activities come under the jurisdiction of the
FDA. It is the policy of the Company to use the FDA regulations as guidelines 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.
The Company’s electronically filed reports
are available at
www.hydromer.com/sec
and www.sec.gov.
Executive Officers
Name
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Position
with Company
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Age
as of August 31, 2012
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Manfred F. Dyck
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Chairman of the BoardChief Executive Officer and President
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77
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Martin C. Dyck
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Executive Vice-President,Operations and President Biosearch Medical Products subsidiary
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50
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John Konar
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Vice-President, Quality Assurance and Director of Human Resources
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63
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Robert Y. Lee
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Vice-President, Finance, Chief Financial Officer and Treasurer
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46
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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 was President of Biosearch Medical Products, Inc. from 1975 until 1998 and a Director of
Biosearch Medical Products, Inc. from 1975 until 2000.
Martin
C. Dyck has been Executive Vice-President, Operations since June of 2001. He was previously Vice-President of Operations since
February 2000 when the Company purchased Biosearch Medical Products. Mr. Dyck has been President of Biosearch since 1998, a position
which he still maintains. Mr. Dyck has been employed by Biosearch since 1986 and has served in various capacities including Director
of New Product Development, where he developed several new medical devices and authored six FDA 510(k) pre-market submissions.
After becoming President of Biosearch in 1998, Mr. Dyck changed the focus of Biosearch to become a contract medical coatings service
provider using proprietary technology unique to Biosearch.
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John
Konar has been the Vice-President of Quality Assurance since February 2004 and Director of Human Resources since February 2000.
Mr. Konar joined Biosearch in 1986 and served as the Director of Human Resources with Biosearch from 1996 until its acquisition
by the Company in 2000, when he then assumed responsibilities for both companies. He also served, with Biosearch, as the Director
of Sales from 1996 until 2000, Director of QA from 1998 until 2004 when he was promoted to Vice-President of Quality Assurance,
and Director of Manufacturing from 2000 to 2001.
Robert
Y. Lee joined the Company in the capacities of Vice-President of Finance, Chief Financial Officer and Treasurer in June 2001.
He earned a MBA in Finance and International Business, and a Bachelors of Science in Accounting and Information Systems, both
from New York University's Stern School of Business. His professional experience includes tenure in the Emerging Business Group
of the New York office of Coopers & Lybrand (currently PricewaterhouseCoopers), the Bristol Myers Squibb Internal Auditing
group, ASARCO's Southern Peru Copper Corporation, now Southern Copper Corporation, part of Grupo Mexico, and Citigroup.