SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON D. C. 20549

                                   FORM 10-K

        ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934

                    For the fiscal year ended June 30, 2010

                         Commission File Number 0-10683

                                 HYDROMER, INC.
       _________________________________________________________________
             (Exact name of registrant as specified in its charter)

          New Jersey                                         22-2303576
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  (State of incorporation)                                (I.R.S. Employer
                                                         Identification No.)

  35 Industrial Parkway, Branchburg, New Jersey                  08876-3424
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   (Address of principal executive offices)                      (Zip Code)

Registrant's telephone number, including area code:      (908) 722-5000
                                                        ------------------------
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 10-K
or any amendment to this Form 10-K (X)

   The  aggregate market value of the voting stock held by non-affiliates of the
Registrant at September 15, 2010 was approximately $1,251,322.

   The  number  of  shares of Registrant's Common Stock outstanding on September
15, 2010 was 4,772,318.

   Portions  of  the  Audited  Financials Statements for the year ended June 30,
2010  are  incorporated  by reference in Part II of this report. Portions of the
Proxy  Statement  of  Registrant  dated  September  24, 2010 are incorporated by
reference in Part III of this report.

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                           FORWARD-LOOKING STATEMENTS

This  Form 10-K report contains forward-looking statements within the meaning of
Section  27A  of  the  Securities  Act of 1933 and Section 21E of the Securities
Exchange  Act  of  1934. Forward-looking statements include, among other things,
business  strategy  and  expectations  concerning  industry  conditions,  market
position,  future  operations,  margins,  profitability,  liquidity  and capital
resources.  Forward-looking statements generally can be identified by the use of
terminology  such as "may," "will," "expect," "intend," "estimate," "anticipate"
or "believe" or similar expressions or the negatives thereof. These expectations
are  based  on  management's  assumptions and current beliefs based on currently
available  information.  Although  the  Company  believes  that the expectations
reflected  in such statements are reasonable, it can give no assurance that such
expectations  will  be correct. You are cautioned not to place undue reliance on



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these forward-looking statements, which speak only as of the date of this report
on  Form 10-K and the Company does not have any obligation to update the forward
looking  statements.  The  Company's  operations  are  subject  to  a  number of
uncertainties,  risks  and  other  influences,  many  of  which  are outside its
control, and any one of which, or a combination of which, could cause its actual
results of operations to differ materially from the forward-looking statements.








































































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                                     PART I

ITEM 1. BUSINESS GENERAL
Hydromer,  Inc (the "Company") is a bio-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(R)
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(R), a cosmetic
intermediate  with  water  resistant  film  forming  properties;  AQUATRIX(R), a
cosmetic   hydrogel;  Dermaseal(R),  a  dermal  barrier  film  product  for  the
prevention  of  contact  dermatitis;  DRAGONHYDE(R),  a  hoof  bath concentrate;
Sea-Slide(R),  a coating for watercraft hulls; and T-HEXX(R), 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 coatings 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  includes  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, both in a
bound and unbounded 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.

The  Company has previously reported license or support agreements in effect and
expiring  relating  to applications of the Hydromer as follows: Annual Report on
Form  10-K  for  the  fiscal years ended June 30, 1983 through 1996 and 2009 and
Form 10-KSB for fiscal years ended 1997 through 2008.

Supply and Support Agreements
In  order  to avail our customers to a continued material source or of 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, some including the escrow of formulas or data with independent agents.

As  of  June  30,  2010,  the  Company has supply and support agreements with 27
companies  covering  the application or availability of Hydromer coatings to the
following devices:

   o  angioplasty balloon catheters,
   o  biliary and pancreatic stents
   o  central venous catheters,
   o  embolization delivery devices,
   o  enteral feeding products,
   o  female contraceptive devices,
   o  guidewires,
   o  guiding and umbilical catheters
   o  infusion microcatheters,
   o  inter/intra-ocular lenses,
   o  intra-occular lense inserts,
   o  liposuction devices,
   o  urinary catheters,
   o  certain urological devices, and
   o  certain vascular devices.

The  Company  is  actively seeking new licensing opportunities and/or supply and
support agreements.

Hydrogels, Drug Delivery, Wound Dressing

Applications  of  the  Company's  Hydrogels  are being developed for wound care,
implants,  drug  delivery, burn care, ultrasonic couplants and cosmetic uses for
several  customers.  The Company is also identifying strategic partners to offer


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hydrogel  coating  services  to  clients  who  do  not have rolled goods coating
capability  and  to  license  Hydrogel  technology for cosmetic and medical use,
including drug release.

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 nor 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
Until the sales of various medical device product lines in fiscal 2009 and 2010,
the  Company  offered  510K/CE marked medical devices through its ISO 13485:2003
certified  and FDA registered Biosearch Medical Products subsidiary. The Company
also  previously contract manufactured products for several large multi-national
marketers  of  medical  devices  on  an  OEM  basis.  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 venue
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 market 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.

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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 optical 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. Food grade
Anti-Fog  coatings,  formulated  with materials that are generally recognized as
safe for food contact as confirmed by independent laboratory extraction testing,
are under evaluation by various parties.

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 back.

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 that of reformulating where necessary.

ANIMAL HEALTH

In  Fiscal  Year  1999,  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  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  environmental  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.

The annual U.S. market for barrier teat dips is estimated to be $100-130 million
at  the  farm  level. The T-HEXX Barrier products contain 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 its niche market,
while  priced  comparably  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. In
fiscal  2002,  the Company launched a complementary product, T-HEXX DRY External

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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. In
fiscal  2004,  two  customers launched our Dry product under their private-label
name, reflecting the strength of our 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(R) 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 outlasted typical Copper Sulfate and Formalin usage.

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 continues 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
customes.  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) the sales of medical
products. During the fiscal year ended June 30, 2009, Johnson & Johnson's Cordis
Division  was  a  significant customer to the Company, accounting for 10% of the
Company's total revenues. There were no significant customers to the Company for
the fiscal year ended June 30, 2010.

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.

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

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into the body. Medical products that would so benefit include:

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.  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.

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. 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.

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.

MARKETING

The Company markets its products and services through five principal means:


                                       7
<PAGE>
1. 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 to expand the application of
current technologies.

2.  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.

3.  Joint  Development:  The  Company  will  continue  to seek joint development
programs,  co-marketing  programs and other business arrangements with potential
partners.

4.  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.

5.  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.

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.

PATENTS AND TRADEMARKS

As of June 30, 2010, the Company has six U.S. patents, two U.S. applications and
various  foreign counterparts. The Company's existing patents covers hydrophilic
coatings  and  foams,  hydrophilic  polymer  blends,  anti-bacterial medical and

                                       8
<PAGE>
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", "Dermaseal",
"Dragonhyde"  (previously  a common law mark until August 17, 2010), "Hydromer",
"Sea-Slide" and "T-HEXX" in the United States and other countries.

Legal action was initiated against a former licensee and other parties in fiscal
2004  on  the  basis  of infringement of the Company's barrier teat dip patented
technology.  Settlement  was  made  in  early  calendar  2006  with all parties,
authenticating both the validity of the technology as well as ownership of such.

EMPLOYEES

As  of  June  30,  2010,  the  Company and its subsidiary had forty-eight 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 to existing products, or
products  introduced  by  it,  which  may be subject to such FDA approval 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

   The executive officers of the Company are as follows: Age as of

Name            Position with Company              Aug 31, 2010
-----           ---------------------              ------------

Manfred F. Dyck - Chairman of the Board,
     Chief Executive Officer and President              75

Martin C. Dyck - Executive Vice-President,
     Operations and President Biosearch
     Medical Products subsidiary                        48

Rainer Gruening - Vice-President,
     Intellectual Property, T-HEXX Int'l Sales          67

John Konar - Vice-President, Quality Assurance
     and Director of Human Resources                    61

Robert Y. Lee - Vice-President, Finance,
     Chief Financial Officer and Treasurer              44

                                      9
<PAGE>

Robert J. Moravsik - Senior Vice-President,
     General Counsel and Secretary                      67

   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.

   Rainer  Gruening  joined  the  Company  as  Vice-President  of  Research  and
Development in June 2001, and in May 2006 became VP of Intellectual Property and
in  2010,  added  the  title  of VP, T-HEXX International Sales. With a Ph.D. in
Chemistry  from  the  University  of Marburg in Germany, his background includes
service  with  Bayer  AG/Deutsche  Solvay  Werke, Troy, G+G International and AM
Cosmetics   in   areas  including  international  regulatory  affairs,  coatings
technology  and  anti-microbials.  Mr.  Gruening  authored and/or co-authored 17
patents  and 35 publications on synthesis and formulation of anti-microbials for
paint  and  coatings,  cosmetics,  personal  care  products,  medical  coatings,
adhesives,  marine anti-fouling and metal working fluids and developed dossiers,
safety assessments and GMP documentation. Additionally, he implemented FDA/CTFA,
European  Biocide  and  Japanese  compliance  requirements for raw materials and
formulation restrictions.

   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
promoted to VP of QA, 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 Pricewaterhouse Coopers),
the  Bristol Myers Squibb Internal Auditing group, ASARCO's Southern Peru Copper
Corporation,  now  Southern  Copper  Corporation,  part  of  Grupo  Mexico,  and
Citigroup.

   Robert  J.  Moravsik  has  been  Senior  Vice-President,  General Counsel and
Secretary since February 2000. He holds a B.S. in Aerospace Engineering, an M.S.
in  Computer  Science  and a Doctorate in Law. He was Vice-President and General
Counsel  since  April  1998.  He  also serves in the same capacity for Biosearch
Medical  Products,  Inc. an affiliated company since 1987. Prior to that, he was
Vice-President  and General Counsel to Fisher Stevens, Inc., a subsidiary of the
Bureau  of  National  Affairs.  He  is an attorney admitted in the states of New
Jersey and New York.

ITEM 2. PROPERTIES

   In  June  1998,  the Company purchased the building and land at 35 Industrial
Parkway,  Branchburg,  NJ  from  Biosearch  Medical Products, then an affiliated
party.  The  facility,  currently  its  sole  facility, is secured by a mortgage
through  a  bank.  See the financial statements included herein for the terms of
the agreement.

   In  2002,  the  Company  completed  its  10,400  square feet expansion at its
primary  location  of  35  Industrial  Parkway.  This  allowed  the  Company  to
consolidate  certain  manufacturing  and  quality assurance functions operations
formerly located on leased space.


                                       10
<PAGE>
   The  expanded  facility 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.




































































<PAGE>
     PART II

ITEM  5.  MARKET  FOR  THE  REGISTRANT'S  COMMON  EQUITY AND RELATED STOCKHOLDER
MATTERS

   Prior  to  January  9,  1986,  the  Company's  Common Stock was traded in the
over-the-counter  market  on  the  National  Association  of Securities Dealer's
Automated  Quotation  System  (NASDAQ)  under  the  symbol "HYDI". Subsequent to
January  9,  1986,  reporting  of  trading was transferred to the National Daily
Quotation   Service  (commonly  known  as  the  "Pink  Sheets").  For  the  past
twenty-four years, trading in the Company's stock has been limited.

   On February 13, 2002 the Company became a listed security on the Boston Stock
Exchange  ("BSE")  under  the  trading symbol "HDO" until the BSE ceased trading
activities  in  2007.  Hydromer  remains  listed  as "HYDI" on the OTC reporting
services.

   The  Company's  common stock traded at prices ranging between $0.30 and $1.10
in  the  fiscal  year  2010 and between $0.25 and $2.50 in the fiscal year 2009.
These  prices may not include retail mark-ups or mark-downs or any commission to
the broker dealer.

   The  approximate number of holders of record of the Common Stock on September
15,  2010  was  219.  There are approximately 500 individual shareholders of the
common stock.

ITEM 6. MANAGEMENT DISCUSSION AND ANALYSIS

   The  below discussion analyzes major factors and trends regarding the results
of  operations  and  the financial condition of the Company as of June 30, 2010,
and  its results of operations for the prior fiscal period. It should be read in
conjunction with the Financial Statements and Notes thereto.

REVENUES  FOR  THE  YEAR  ENDED  JUNE  30,  2010  WERE $6,200,504 AS COMPARED TO
$7,752,007 FOR THE SAME PERIOD LAST YEAR, A DECREASE OF $1,551,503 (20.0%).

   Product  sales and services revenues were $5,205,245 for the 2010 fiscal year
as compared to $6,518,424 the prior fiscal year, a 20.1% decrease or $1,313,179.

   License  royalties  and  contract payments were $995,259 in fiscal 2010, down
$238,324 or 19.3% from fiscal 2009's results of $1,233,583.

MANAGEMENT  COMMENT: The decrease in product sales was primarily due to the sale
of  the  OEM medical device product lines which accounted for over $1,000,000 of
the  lower  product  sales  revenues.  Growth  in  our  animal  health  division
(including   from  our  new  Dragonhyde  Hoof  Bath  Concentrates  product)  and
Industrial  product  lines  (from increased demand for our anti-fog condensation
control  and  anti-frost  coatings), was reduced by lower medical coatings sales
when comparing the results from fiscal 2009 to fiscal 2010.

   Contract  coating services income decreased by approximately $397,000 between
the  years,  largely  due  to  a  customer's  conversion  from procuring coating
services to purchasing chemical coatings for their own application servicing.

   Non-recurring  (periodic but not annual) R&D projects contributed $324,000 in
services  revenues  for  the fiscal 2009 year. There was no paid R&D projects in
fiscal year 2010.

   A  customer  cancelled  their $100,000 per month Supply and Support Agreement
effective  December 31, 2008. A new agreement, at $35,000 per month, was entered
into  effective January 1, 2009. Under the new agreement, the customer no longer
had  exclusive  rights  to  the  technology.  This  change in customer agreement
contributed  to  a  decrease  of $390,000 in contract revenues in fiscal 2010 as
compared to the previous year.

TOTAL  EXPENSES FOR THE YEAR ENDED JUNE 30, 2010 WERE $6,759,856, AN IMPROVEMENT
OF 6.7% OR $488,934 LOWER THAN THE 2009 FISCAL YEAR RESULTS OF $7,248,790.

   Cost  of  Goods Sold was $2,405,023 for fiscal 2010 as compared to $3,193,773
for  fiscal  2009.  Operating  expenses  were $4,978,695 and $4,943,366, for the
years  ended June 30, 2010 and 2009, respectively. Other Expenses added $173,405
to expenses for fiscal 2010 as compared with $223,886 for fiscal 2009. There was
an  Income  Tax  benefit  of $461,638 in fiscal 2010 as compared with Income Tax
expense of $181,113 in fiscal 2009. Reducing expenses in fiscal 2010 was the one
time  Gain  from  Sale  of  Assets  of $335,629 as compared to $1,293,348 during
fiscal 2009.

                                       11
<PAGE>
MANAGEMENT  COMMENT:  The  exit from the higher cost OEM medical device business
(sale  of product lines in February and November 2009) resulted in lower product
sales  and  hence,  lower  material  costs.  In  addition,  this  eliminated the
intensive  labor required and outside sterilization costs, further lowering Cost
of Sales in fiscal 2010. We will see continued improvement in subsequent periods
as  the Company continued its involvement in OEM medical device production until
the  conclusion  of the transition period following the related sales (continued
reduced operations through October 2009 and April 2010, respectively).

   The  decrease in the Cost of Sales for fiscal 2010 was partially offset by an
increase in Operating Expenses primarily due to the focus on international sales
of  the  T-HEXX  Animal  Health  business  that  entailed  adding  staffing  and
additional  promotions  through  client  visits,  exhibiting  at  tradeshows and
advertising.

   Included  in  the  Company's  Operating  Expenses  are Research & Development
expenditures  (primarily  salaries  and  benefits) and funding to its patent and
trademark  estate.  While  most of these costs translate to minimal value in the
current  operations,  they  more  provide  for  future  results from new product
development  to  the protection of such. These "re-investment" costs represented
21.6%  and  22.0% of total Operating Expenses (or $1,075,175 and $1,080,720) for
the years ended June 30, 2010 and 2009, respectively.

   An  Income  Tax  benefit  of $461,638 was recorded in fiscal 2010 as compared
with  an  Income Tax provision of $181,113 for the year ended June 30, 2009. The
decrease  in  tax expense was attributed to the to the pre tax loss situation in
fiscal 2010 as compared to the pre tax income in fiscal 2009.

A  NET  LOSS  OF $559,352 ($0.12 PER SHARE) IS REPORTED FOR THE 2010 FISCAL YEAR
COMPARED WITH NET INCOME OF $503,217 ($0.11 PER SHARE) FOR THE 2009 FISCAL YEAR.

   MANAGEMENT  COMMENT:  A net loss for the 2010 fiscal year was not unexpected.
The  Company's  2008 strategic plan to divest out of the higher operational cost
medical  OEM  device  products  (aged product lines which was labor and material
intensive  to  produce  that  would  have  required  a fairly high investment to
refresh/update,  along with a disproportionate level of inventories to carry) to
focus  on  the  T-HEXX Animal Health division provided up front cash but reduced
future revenues: the impact to fiscal 2010 revenues was in excess of $1 million.
The  Company has been ramping up the T-HEXX Animal Health division, which during
the  past  two years introduced new products such as highly concentrated barrier
teat  dip  Syrups,  greener  products  and  more  recently  Dragonhyde Hoof Bath
Concentrates  but  needed  cash  for such expansion (additional staffing and new
sales  promotions  such  as  increased  tradeshow  exhibitions and advertising).
However,  the  net  loss  is  primarily  attributable  to  a  Supply and Support
Agreement  which  previously  provided  $1,200,000  in cash revenues in previous
years  (through  December  31,  2008)  but currently at $420,000 annually (since
January  1,  2009)  or  an  impact of $780,000. It was highly unfortunate of the
timing  of the cancellation and subsequent replacement of the Supply and Support
Agreement  as  the Company did not have an opportunity to reflect the results of
its  re-building  strategy independently. Nonetheless, the Company believes that
it is near the turning point back to profitability.

LIQUIDITY AND CAPITAL RESOURCES

WORKING  CAPITAL  AS OF JUNE 30, 2010 WAS $1,961,322 LOWER BY $1,031,376 AGAINST
$2,992,698 OF THE PRIOR YEAR.

   Compared  against  June  30, 2009, the June 30, 2010 cash and cash equivalent
balance  was lower by $742,155, accounts receivable lower by $138,726, inventory
lower by $367,280 and current liabilities lower by $206,185.

   MANAGEMENT  COMMENT:  Cash  flows  from  Operations  used  $955,802  in cash.
Included in the cash used for Operations was $1,075,175 as "re-investment" costs
(R&D  and  patent  and  trademark  costs)  that yields more future benefits than
current.  The Company is in midst of a strategic initiative of refocusing in the
more profitable T-HEXX animal health line away from the lower margin OEM medical
product  lines.  (The  OEM  medical  business  also  required  a large inventory
carrying  level).  Having  shed  the  OEM  medical business, the Company forsees
immediate  improvement  to its operating margins (lower cost of sales rate). The
Company's  other  business lines (such as medical coatings (including new supply
agreements   and   equipment   sales  continuing),  contract  coating  services,
industrial anti-fog and anti-frost coatings) are growing but we expect growth to
our  T-HEXX  animal  health business alone to be sufficient to turn us around in
the very near future.



                                       12
<PAGE>
ITEM 7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

   For  information  concerning  this  item,  see  pages  F-1 through F-8 of the
"Audited  Financial  Statements  for  the  year  ended  June  30,  2010,"  which
information is incorporated herein by reference.

ITEM  8.  CHANGES  IN  AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING AND
FINANCIAL DISCLOSURE

                                                   Not applicable.




ITEM 8A. DISCLOSURE CONTROLS AND PROCEDURES

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

   Under the supervision and with the participation of management, including the
Chief  Executive  Officer  and  President  and  the  Chief Financial Officer, we
evaluated  the  effectiveness  of  the  design  and  operation of the disclosure
controls  and  procedures  (as  such term is defined in Rule 13a-15(e) under the
Securities  and  Exchange Act of 1934 (the "Exchange Act")). Disclosure controls
and  procedures are the controls and other procedures that we designed to ensure
that we record, process, summarize and report in a timely manner the information
we  must  disclose  in reports that we file with or submit to the Securities and
Exchange  Commission under the Exchange Act. Based on this evaluation, our Chief
Executive  Officer  and  Chief  Financial Officer concluded that, our disclosure
controls  and  procedures  were effective as of the end of the period covered by
this report.

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

   There  were  no  changes  to  our  Company's  internal control over financial
reporting  that  occurred  during the period that has materially affected, or is
reasonably  likely  to  materially  affect  the  Company's internal control over
financial reporting.

MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

   Our  management  is  responsible  for  establishing  and maintaining adequate
internal  control  over  financial  reporting.  This internal control system was
designed  to  provide reasonable assurance to the Company's management and Board
of  Directors  regarding  the  preparation  and  fair  presentation of published
financial statements.

   All  internal  control  systems,  no  matter how well designed, have inherent
limitations.  Therefore,  even  those  systems  determined  to  be effective can
provide   only   reasonable   assurance  with  respect  to  financial  statement
preparation and presentation.

   Management  assessed the effectiveness of the Company's internal control over
financial  reporting as of June 30, 2010. In making this assessment, we used the
criteria  set forth by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO) in Internal Control--Integrated Framework.

   Based  on our assessment, we believe that, as of June 30, 2010, the Company's
internal control over financial reporting is effective based on those criteria.

   There  are  two  deficiencies,  which are not required to be disclosed but to
which  management has elected to disclose, within the Company's internal control
over financial reporting:

o Segregation of Duties (control deficiency)

   Due  to  the  size of the Company, there is a lack of a proper segregation of
   duties, including that of the Chief Financial Officer.

o    Reporting Controls over Inventory (control deficiency)

   The  Company  lacks  a  perpetual  inventory system to adequately account for
   inventory  transactions  and to report inventory, leading it to be reasonably
   possible that financial statements are misstated during interim periods. Full
   physical  inventory  counts  are  conducted  at  year-end  allowing  for  any
   misstatement  to  be  inconsequential.  The sale of product lines in February
   2009  and  November  2009  reduced  inventory  levels  at  year-end  2010  to
   approximately  24%  of the 2008 year-end levels, further reducing the risk of
                                       13
<PAGE>
   reported  differences.  (June  30,  2010  inventories represented 9% of total
   currents  assets  as  compare with June 30, 2008 inventories being 43% of the
   then current assets).

Management's report on Internal Control over Financial Reporting was not subject
to  attestation  by the Company's independent registered accounting firm's under
Section 404(b) of the Sarbanes-Oxley Act pursuant to the rules of the Securities
and Exchange Commission.

                                    PART III

ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

   For  information  concerning  this  item,  see  "Item 1. Business - Executive
Officers"  and  pages  3 through 11 in the Proxy Statement filed with respect to
the   2010  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 9 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 page 11 of the Proxy Statement,
which information is incorporated herein by reference.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED
   TRANSACTIONS

   During the past fiscal year, there have been no related party transactions.

                                    PART IV

ITEM 13. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(A) 1. FINANCIAL STATEMENTS:

   The  financial  statements  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 filed one Form 8-K during the year ended June 30, 2010, reporting
the Sale of Product Lines.






















<PAGE>
POWER OF ATTORNEY

   The  Company  and  each  person  whose signature appears below hereby appoint
Manfred  F.  Dyck  and  Robert  Y.  Lee  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                                 /s/ Robert Y. Lee
--------------------------                          --------------------------
Manfred F. Dyck                                     Robert Y. Lee
President, Principal Executive Officer,             Chief Accounting Officer
     Chairman of the Board of Directors             August 25, 2010
August 25, 2010


   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                          /s/ Ursula M. Dyck
   --------------------------------             --------------------------------
   Manfred F. Dyck                              Ursula M. Dyck
   President, Principal Executive Officer,      Director
       Chairman of the Board of Directors       August 26, 2010
   August 25, 2010




   /s/ Robert H. Bea                            /s/ Maxwell Borow
   --------------------------------             --------------------------------
   Robert H. Bea                                Maxwell Borow, MD
   Director                                     Director
   August 25, 2010                              August 25, 2010




   /s/ Dieter Heinemann                         /s/ Frederick L. Perl
   --------------------------------             --------------------------------
   Dieter Heinemann                             Frederick L. Perl, MD
   Director                                     Director
   August 17, 2010                              August 25, 2010




   /s/ Michael F. Ryan                          /s/ George A. Ziets
   --------------------------------             --------------------------------
   Michael F. Ryan, PhD                         George A. Ziets
   Director                                     Director
   August 25, 2010                              August 25, 2010








<PAGE>
                                  INDEX TO 2010 10-K CERTIFICATIONS



          Exhibit No. Description

         31.1   Certification  of  Manfred  F.  Dyck,  Chief  Executive Officer,
                pursuant to Securities Exchange Act Rule 13a-14(a).

         31.2   Certification   of  Robert  Y.  Lee,  Chief  Financial  Officer,
                pursuant to Securities Exchange Act Rule 13a-14(a).

         32.1   Certification  pursuant  to  18  U.S.C. Section 1350, as adopted
                pursuant  to  Section  906  of  the  Sarbanes-Oxley Act of 2002,
                signed  by Manfred F. Dyck, Chief Executive Officer of Hydromer,
                Inc.

         32.2   Certification  pursuant  to  18  U.S.C. Section 1350, as adopted
                pursuant  to  Section  906  of  the  Sarbanes-Oxley Act of 2002,
                signed  by  Robert  Y. Lee, Chief Financial Officer of Hydromer,
                Inc.

























































<PAGE>
                                  EXHIBIT 31.1

                                 HYDROMER, INC.
                SARBANES-OXLEY ACT SECTION 302(A) CERTIFICATION

    I, Manfred F. Dyck, certify that:

      1.    I have reviewed this annual report on Form 10-K of Hydromer, Inc.;

      2.    Based  on  my  knowledge,  this  report  does not contain any untrue
            statement  of  a  material  fact  or  omit  to state a material fact
            necessary to make the statements made, in light of the circumstances
            under  which  such statements were made, not misleading with respect
            to the period covered by this report;

      3.    Based on my knowledge, the financial statements, and other financial
            information  included in this report, fairly present in all material
            respects  the  financial  condition,  results of operations and cash
            flows  of  the  registrant  as of, and for, the periods presented in
            this report;

      4.    The  registrant's other certifying officer, Robert Y. Lee, and I are
            responsible for establishing and maintaining disclosure controls and
            procedures   (as   defined  in  Exchange  Act  Rules  13a-15(e)  and
            15d-15(e)) and internal control over financial reporting (as defined
            in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and
            have:

            a.    Designed  such  disclosure  controls and procedures, or caused
                  such  disclosure  controls and procedures to be designed under
                  our  supervision, to ensure that material information relating
                  to the registrant, including its consolidated subsidiaries, is
                  made known to us by others within those entities, particularly
                  during the period in which this report is being prepared;

            b.    Designed  such  internal controls over financial reporting, or
                  caused  such  internal controls over financial reporting to be
                  designed   under   our   supervision,  to  provide  reasonable
                  assurances  regarding  the  reliability of financial reporting
                  and  the  preparation  of  financial  statements  for external
                  purposes  in  accordance  with  generally  accepted accounting
                  principles;

            c.    Evaluated  the  effectiveness  of  the registrant's disclosure
                  controls  and  procedures  and  presented  in  this report our
                  conclusions about the effectiveness of the disclosure controls
                  and  procedures,  as  of the end of the period covered by this
                  report based on such evaluation; and

            d.    Disclosed  in  this  report  any  change  in  the registrant's
                  internal control over financial reporting that occurred during
                  the  registrant's most recent fiscal quarter (the registrant's
                  fourth  fiscal  quarter  in the case of an annual report) that
                  has materially affected, or is reasonably likely to materially
                  affect,  the  registrant's  internal  control  over  financial
                  reporting; and

      5.    The  registrant's  other certifying officer(s) and I have disclosed,
            based  on  our  most  recent  evaluation  of  internal  control over
            financial  reporting,  to  the  registrant's  auditors and the audit
            committee  of  the  registrant's  board  of  directors  (or  persons
            performing the equivalent functions):

            a.    All  significant  deficiencies  and material weaknesses in the
                  design   or  operation  of  internal  control  over  financial
                  reporting  which are reasonably likely to adversely affect the
                  registrant's  ability to record, process, summarize and report
                  financial information; and

            b.    Any  fraud,  whether or not material, that involves management
                  or  other  employees  who  have  a  significant  role  in  the
                  registrant's internal control over financial reporting.

       Date: September 27, 2010

                                            By: /s/ Manfred F. Dyck
                                            Manfred F. Dyck
                                            Chairman and Chief Executive Officer
<PAGE>
                                  EXHIBIT 31.2

                                 HYDROMER, INC.
                SARBANES-OXLEY ACT SECTION 302(A) CERTIFICATION

    I, Robert Y. Lee, certify that:

      1.    I have reviewed this annual report on Form 10-K of Hydromer, Inc.;

      2.    Based  on  my  knowledge,  this  report  does not contain any untrue
            statement  of  a  material  fact  or  omit  to state a material fact
            necessary to make the statements made, in light of the circumstances
            under  which  such statements were made, not misleading with respect
            to the period covered by this report;

      3.    Based on my knowledge, the financial statements, and other financial
            information  included in this report, fairly present in all material
            respects  the  financial  condition,  results of operations and cash
            flows  of  the  registrant  as of, and for, the periods presented in
            this report;

      4.    The  registrant's  other  certifying officer, Manfred F. Dyck, and I
            are responsible for establishing and maintaining disclosure controls
            and  procedures  (as  defined  in  Exchange  Act Rules 13a-15(e) and
            15d-15(e)) and internal control over financial reporting (as defined
            in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and
            have:

            a.    Designed  such  disclosure  controls and procedures, or caused
                  such  disclosure  controls and procedures to be designed under
                  our  supervision, to ensure that material information relating
                  to the registrant, including its consolidated subsidiaries, is
                  made known to us by others within those entities, particularly
                  during the period in which this report is being prepared;

            b.    Designed  such  internal controls over financial reporting, or
                  caused  such  internal controls over financial reporting to be
                  designed   under   our   supervision,  to  provide  reasonable
                  assurances  regarding  the  reliability of financial reporting
                  and  the  preparation  of  financial  statements  for external
                  purposes  in  accordance  with  generally  accepted accounting
                  principles;

            c.    Evaluated  the  effectiveness  of  the registrant's disclosure
                  controls  and  procedures  and  presented  in  this report our
                  conclusions about the effectiveness of the disclosure controls
                  and  procedures,  as  of the end of the period covered by this
                  report based on such evaluation; and

            d.    Disclosed  in  this  report  any  change  in  the registrant's
                  internal control over financial reporting that occurred during
                  the  registrant's most recent fiscal quarter (the registrant's
                  fourth  fiscal  quarter  in the case of an annual report) that
                  has materially affected, or is reasonably likely to materially
                  affect,  the  registrant's  internal  control  over  financial
                  reporting; and

      5.    The  registrant's  other certifying officer(s) and I have disclosed,
            based  on  our  most  recent  evaluation  of  internal  control over
            financial  reporting,  to  the  registrant's  auditors and the audit
            committee  of  the  registrant's  board  of  directors  (or  persons
            performing the equivalent functions):

            a.    All  significant  deficiencies  and material weaknesses in the
                  design   or  operation  of  internal  control  over  financial
                  reporting  which are reasonably likely to adversely affect the
                  registrant's  ability to record, process, summarize and report
                  financial information; and

            b.    Any  fraud,  whether or not material, that involves management
                  or  other  employees  who  have  a  significant  role  in  the
                  registrant's internal control over financial reporting.

       Date: September 27, 2010

                                         By: /s/ Robert Y. Lee
                                         Robert Y. Lee
                                         Vice President, Chief Financial Officer
<PAGE>
                                  EXHIBIT 32.1

                    CERTIFICATION OF CHIEF EXECUTIVE OFFICER
                                  PURSUANT TO
                            18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                 SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


    I,  Manfred F. Dyck, certify, pursuant to 18 U.S.C. Section 1350, as adopted
    pursuant  to  Section 906 of the Sarbanes-Oxley Act of 2002, that the Annual
    Report  of  Hydromer,  Inc.  on Form 10-K for the fiscal year ended June 30,
    2010  fully  complies with the requirements of Section 13(a) or 15(d) of the
    Securities  Exchange  Act  of  1934  and  that information contained in such
    Annual  Report  on  Form  10-K  fairly presents in all material respects the
    financial condition and results of operations of Hydromer, Inc.

       Date: September 27, 2010             By: /s/ Manfred F. Dyck
                                            Manfred F. Dyck
                                            Chairman and Chief Executive Officer



--------------------------------------------------------------------------------




                                  EXHIBIT 32.2

                    CERTIFICATION OF CHIEF FINANCIAL OFFICER
                                  PURSUANT TO
                            18 U.S.C. SECTION 1350,

                             AS ADOPTED PURSUANT TO
                 SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


    I,  Robert  Y.  Lee, certify, pursuant to 18 U.S.C. Section 1350, as adopted
    pursuant  to  Section 906 of the Sarbanes-Oxley Act of 2002, that the Annual
    Report  of  Hydromer,  Inc.  on Form 10-K for the fiscal year ended June 30,
    2010  fully  complies with the requirements of Section 13(a) or 15(d) of the
    Securities  Exchange  Act  of  1934  and  that information contained in such
    Annual  Report  on  Form  10-K  fairly presents in all material respects the
    financial condition and results of operations of Hydromer, Inc.

       Date: September 27, 2010          By: /s/ Robert Y. Lee
                                         Robert Y. Lee
                                         Vice President, Chief Financial Officer





























<PAGE>









                          HYDROMER, INC. & SUBSIDIARY

                       CONSOLIDATED FINANCIAL STATEMENTS

                             JUNE 30, 2010 AND 2009
































































<PAGE>
            REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and
Stockholders of Hydromer, Inc. & Subsidiary

We  have  audited the accompanying balance sheets of Hydromer, Inc. & Subsidiary
as  of  June  30,  2010  and  2009  and  the  related  statements of operations,
stockholders' equity and cash flows for each of the years in the two year period
ended June 30, 2010. Hydromer, Inc. & Subsidiary's management is responsible for
these financial statements. Our responsibility is to express an opinion on these
financial statements based on our audits.

We  conducted  our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements  are  free  of  material misstatement. The company is not required to
have,  nor  were  we  engaged  to perform, an audit of its internal control over
financial  reporting. Our audit included consideration of internal controls over
financial  reporting  as  a  basis  for  designing  audit  procedures  that  are
appropriate  in  the  circumstances,  but  not  for the purpose of expressing an
opinion  on  the  effectiveness of the company's internal control over financial
reporting.  Accordingly,  we  express  no  such  opinion. An audit also includes
examining,  on  a test basis, evidence supporting the amounts and disclosures in
the   financial   statements,  assessing  the  accounting  principles  used  and
significant  estimates  made  by  management,  as well as evaluating the overall
financial   statement  presentation.  We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

In  our  opinion,  the financial statements referred to above present fairly, in
all  material respects, the financial position of Hydromer, Inc. & Subsidiary as
of  June 30, 2010 and 2009, and the results of its operations and its cash flows
for  each  of the years in the two-year period ended June 30, 2010 in conformity
with accounting principles generally accepted in the United States of America.

                                           Rosenberg Rich Baker Berman & Company


Somerset, New Jersey
October 4, 2010







































<PAGE>
                          HYDROMER, INC. & SUBSIDIARY
                 INDEX TO THE CONSOLIDATED FINANCIAL STATEMENTS
                             JUNE 30, 2010 AND 2009

<TABLE>
        <S>                                                                                     <C>
                                                                                                   Page

         Financial Statements

             Consolidated Balance Sheets......................................................       F-1

             Consolidated Statements of Operations............................................       F-2

             Consolidated Statements of Stockholders' Equity..................................       F-2

             Consolidated Statements of Cash Flows............................................       F-3

             Notes to the Consolidated Financial Statements...................................   F-4 to F-8

</TABLE>

























































<PAGE>
                                              HYDROMER, INC. & SUBSIDIARY
                                              CONSOLIDATED BALANCE SHEETS
<TABLE>
<S>                                                                                    <C>               <C>
                                                                                               June 30,
                                                                                        2010              2009
-------------------------------------------------------------------------------------------------------------------

ASSETS
Current Assets:
    Cash and cash equivalents                                                     $       843,610   $    1,585,765
    Short-term investments                                                                440,000          450,000
    Trade receivables less allowance for doubtful accounts of $33,276 and
          $57,741 as of June 30, 2010 and 2009, respectively                              920,252        1,058,978
    Inventory                                                                             248,569          615,849
    Prepaid expenses                                                                      227,338          204,280
    Deferred tax asset                                                                       -               8,976
    Other                                                                                  15,487            8,968
-------------------------------------------------------------------------------------------------------------------
         Total Current Assets                                                           2,695,256        3,932,816
-------------------------------------------------------------------------------------------------------------------

Property and equipment, net                                                             2,988,536        3,135,017
Deferred tax asset, non-current                                                         1,011,945          521,986
Intangible Assets, net                                                                    839,722          740,426
-------------------------------------------------------------------------------------------------------------------
         Total Assets                                                             $     7,535,459   $    8,330,245
===================================================================================================================

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
    Accounts payable                                                              $       342,030   $      380,838
    Accrued expenses                                                                      251,276          341,088
    Current portion of Capital Leases                                                      16,000           14,473
    Current portion of deferred revenue                                                    75,828           82,132
    Current portion of mortgage payable                                                    48,800           45,696
    Income tax payable                                                                       -              75,891
-------------------------------------------------------------------------------------------------------------------
         Total Current Liabilities                                                        733,934          940,118
-------------------------------------------------------------------------------------------------------------------
Deferred tax liability                                                                    318,375          285,858
Long-term portion of Capital Leases                                                        34,716           50,258
Long-term portion of deferred revenue                                                     165,813          161,019
Long-term portion of mortgage payable                                                   2,769,036        2,820,055
-------------------------------------------------------------------------------------------------------------------
         Total Liabilities                                                              4,021,874        4,257,308
-------------------------------------------------------------------------------------------------------------------

Contingencies                                                                                -                -

Stockholders' Equity
  Preferred stock - no par value, authorized 1,000,000 shares, no shares
         issued and outstanding                                                              -                -
    Common stock - no par value, authorized 15,000,000 shares;
         4,783,235 shares issued and 4,772,318 shares outstanding
         as of June 30, 2010 and 2009                                                   3,721,815        3,721,815
    Contributed capital                                                                   633,150          633,150
    Accumulated deficit                                                                  (835,240)        (275,888)
    Treasury stock, 10,917 common shares at cost                                           (6,140)          (6,140)
-------------------------------------------------------------------------------------------------------------------
Total Stockholders' Equity                                                              3,513,585        4,072,937
-------------------------------------------------------------------------------------------------------------------
Total Liabilities and Stockholders' Equity                                        $     7,535,459   $    8,330,245
===================================================================================================================

See notes to the consolidated financial statements.
</TABLE>










                                      F-1
<PAGE>
                                              HYDROMER, INC. & SUBSIDIARY
                                         CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<S>                                                                                      <C>             <C>
                                                                                            Year Ended June 30,
                                                                                            2010            2009
--------------------------------------------------------------------------------------------------------------------
REVENUES
    Sale of products                                                                  $   3,784,164   $   4,390,321
    Service revenues                                                                      1,421,081       2,128,103
    Royalties and Contract Revenues                                                         995,259       1,233,583
--------------------------------------------------------------------------------------------------------------------
         TOTAL REVENUES                                                                   6,200,504       7,752,007
--------------------------------------------------------------------------------------------------------------------

EXPENSES
     Cost of Sales                                                                        2,405,023       3,193,773
     Operating Expenses                                                                   4,978,695       4,943,366
     Other Expenses, net                                                                    173,405         223,886
     Gain from Sale of Assets                                                              (335,629)     (1,293,348)
     (Benefit from) Provision for Income Taxes                                             (461,638)        181,113
--------------------------------------------------------------------------------------------------------------------

         TOTAL EXPENSES                                                                   6,759,856       7,248,790
--------------------------------------------------------------------------------------------------------------------

         NET (LOSS) INCOME                                                            $    (559,352)  $     503,217
====================================================================================================================

         (Loss) Earnings Per Common Share                                             $       (0.12)  $        0.11

         Weighted Average Number of Common Shares Outstanding                             4,772,318       4,772,318

                           There was no impact to earnings per share from dilutive securities
                        under the treasury stock method of computing dilutive earnings per share.

See notes to the consolidated financial statements.
</TABLE>


                          HYDROMER, INC. & SUBSIDIARY
                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
================================================================================
<TABLE>
<S>                              <C>       <C>           <C>          <C>              <C>      <C>          <C>
                                     Common Stock        Contributed   Accumulated       Treasury Stock
                                -----------------------  -------------------------    ---------------------
                                  Shares      Amount       Capital       Deficit       Shares      Amount        Total
                                -----------  ----------    ---------   -----------    ---------   ---------    -----------
Balance June 30, 2008           4,783,235   $ 3,721,815   $  633,150   $  (779,105)      10,917  $  (6,140)   $ 3,569,720

    Net Income                                                            503,217                                503,217
                                -----------  ----------    ---------   -----------   ---------   ---------    -----------
Balance June 30, 2009           4,783,235   $ 3,721,815   $  633,150   $  (275,888)      10,917  $  (6,140)   $ 4,072,937

      Net Loss                                                            (559,352)                              (559,352)
                                -----------  ----------    ---------    -----------   ---------   ---------    -----------
BALANCE JUNE 30, 2010            4,783,235  $ 3,721,815   $  633,150   $  (835,240)      10,917  $  (6,140)   $ 3,513,585
                                ===========  ==========    =========    ===========   =========   =========    ===========

              See notes to the consolidated financial statements.
</TABLE>















                                      F-2
<PAGE>
                                              HYDROMER, INC. & SUBSIDIARY
                                         CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<S>                                                                                       <C>             <C>
                                                                                               Year Ended June 30,
                                                                                              2010            2009
---------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net (Loss) Income                                                                     $    (559,352)  $     503,217
  Adjustments to reconcile net (loss) income to net cash (used in) provided by
    operating activities:
       Gain from the Sale of Product Lines                                                   (335,629)     (1,293,348)
       Depreciation and amortization                                                          428,451         475,010
       Impairment of Intangibles                                                                 -            167,252
       Loss on Disposal of Fixed Assets                                                          -             62,368
       Deferred income taxes                                                                 (448,467)        175,631
       Changes in Assets and Liabilities
         Trade receivables                                                                    138,726          41,410
         Inventory                                                                             70,787         150,159
         Prepaid expenses                                                                     (23,058)        (54,554)
         Other assets                                                                         (19,175)         (1,821)
         Accounts payable and accrued liabilities                                            (128,620)       (218,966)
         Deferred revenues                                                                     (1,512)        105,639
         Income taxes payable                                                                 (77,953)          1,239
---------------------------------------------------------------------------------------------------------------------

             Net Cash (Used in) Provided by Operating Activities                             (955,802)        113,236

---------------------------------------------------------------------------------------------------------------------

CASH FLOWS FROM INVESTING ACTIVITIES:
    Cash purchases of property and equipment                                                 (245,742)       (163,697)
    Cash payments on Patents and Trademarks                                                  (302,696)       (319,922)
    Sale of Product Lines                                                                     800,000       1,600,000
    Cash purchases of short-term investments                                                 (690,000)       (450,000)
    Maturity of short-term investments                                                        700,000           -
----------------------------------------------------------------------------------------------------------------------

             Net Cash Provided by Investing Activities                                        261,562         666,381

----------------------------------------------------------------------------------------------------------------------

CASH FLOWS FROM FINANCING ACTIVITIES:
       Net payments against Line of Credit                                                       -           (289,973)
       Repayment of long-term borrowings                                                      (47,915)     (1,912,282)
       New long-term borrowings                                                                  -          2,900,000
----------------------------------------------------------------------------------------------------------------------

             Net Cash (Used in) Provided by Financing Activities                              (47,915)        697,745

----------------------------------------------------------------------------------------------------------------------

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS:                                        (742,155)      1,477,362
Cash and Cash Equivalents at Beginning of Period                                            1,585,765         108,403
----------------------------------------------------------------------------------------------------------------------

Cash and Cash Equivalents at End of Period                                              $     843,610   $   1,585,765
======================================================================================================================

                Cash paid during the year for:
                        Interest                                                        $     202,411   $     191,511
                        Income taxes                                                    $      77,080   $       3,694

              See notes to the consolidated financial statements.
</TABLE>












                                      F-3
<PAGE>
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NATURE OF OPERATIONS
  Hydromer,  Inc.  &  Subsidiary  (the  "Company") is a bio-polymer research and
development  company  based  in  Branchburg,  New  Jersey.  The Company develops
polymer  complexes  for  commercial markets in both the United States and abroad
for  the  medical,  cosmetics,  animal health and industrial fields. The Company
obtains  patent  rights  on  certain  products  from  which royalty revenues are
received.  Its wholly owned subsidiary, Biosearch Medical Products, Inc., a U.S.
based corporation, is an OEM manufacturer for various medical products companies
as  well  as  the  manufacturer  of  its own line of endoscopic products sold to
hospitals,  domestically  and internationally, through a network of dealers. The
Company  also offers R&D, engineering and contract coating services in its array
of capabilities. During the 2009 calendar year, the Company sold off most of its
OEM  medical  device  product lines leaving Biosearch Medical Products, Inc., as
primarily in contract coating services (also see Footnote 14).

PRINCIPLES OF CONSOLIDATION
  The  consolidated  financial statements include the accounts of Hydromer, Inc.
and  its  wholly  owned  subsidiary.  All  significant intercompany balances and
transactions have been eliminated.

CASH AND CASH EQUIVALENTS
  Cash  and  cash equivalents consist of investments with original maturities of
three months or less.

SHORT-TERM INVESTMENTS
  Short-term  investments  consist  of  investments  other  than  cash  and cash
equivalents  with original maturities of greater than three months and less than
one  year.  Short-term investments as of June 30, 2010 were $440,000, comprising
of  bank  CD's  with  interest  rates  ranging  from  1.14% to 1.25%. Short term
investments as of June 30, 2009 were $450,000.

ACCOUNTS RECEIVABLES
  Accounts   receivable   are  uncollateralized,  non-interest-bearing  customer
obligations  due  under normal trade terms requiring payment typically within 30
days  from  the  invoice  date, or in the case of royalties or contract payments
(see  Revenue  Recognition), usually 45 days from the end of a calendar quarter.
Trade  accounts  receivable  are  stated  at  the amount billed to the customer;
royalties  and  contract revenues are estimated until reported by the licensee /
contractual party. Payments of accounts receivable are allocated to the specific
invoices  identified on the customer's remittance advice or, if unspecified, are
applied  to  the  oldest  unpaid  invoices.  The  carrying  amount  of  accounts
receivable  is reduced by a valuation allowance that reflects the Company's best
estimate  of  the  amounts  that may not be collected. This estimate is based on
reviews  of  all  balances  in excess of 90 days past due from the invoice date.
Based on this assessment of current credit worthiness, the Company estimates the
portion,  if  any,  of  the  balance that will not be collected. Management also
considers  the  need  for  additional general reserves and reviews its valuation
allowance on a quarterly basis.

FAIR VALUE MEASUREMENTS
   Effective July 1, 2008, the Company adopted Accounting Standards Codification
("ASC")  820-10,  Fair  Value  Measurements.  ASC  820-10  defines  fair  value,
establishes  a  framework  for  measuring  fair  value  under generally accepted
accounting  principles  and  enhances disclosures about fair value measurements.
Fair  value  is  defined  under  ASC  820-10 as the exchange price that would be
received  for  an  asset  or paid to transfer a liability (an exit price) in the
principal  or  the  most  advantageous  market  for  an asset or liability in an
orderly  transaction  between  participants  on  the measurement date. Valuation
techniques  used to measure fair value under ASC 820-10 must maximize the use of
observable  inputs  and  minimize  the  use of unobservable inputs. The standard
describes  a  fair  value  hierarchy based on the levels of inputs, of which the
first  two are considered observable and the last unobservable, that may be used
to measure fair value which are the following:

      o  Level  1  -  Quoted  prices  in  active markets for identical assets or
      liabilities.
      o Level 2 - Inputs other than Level 1 that are observable, either directly
      or  indirectly,  such  as quoted prices for similar assets or liabilities;
      quoted  prices  in  markets  that are not active; or other inputs that are
      observable  or corroborated by observable market data or substantially the
      full  term  of  the assets or liabilities.
      o  Level 3 - Unobservable inputs that are supported by little or no market
      activity  and  that  are  significant  to  the  value  of  the  assets  or
      liabilities

                                      F-4
<PAGE>
INVENTORIES
  Inventories  are  valued  at  the  lower  of cost, determined by the first-in,
first-out  method,  or  market  and  include  appropriate  amounts  of labor and
overhead.

DEPRECIATION
  The  cost  of  property  and equipment, which includes a reasonable portion of
labor  costs  for  equipment  built  in-house, is depreciated on a straight-line
method  over  the estimated useful lives of the assets: 5-10 years for machinery
and equipment, 3-5 years for furniture and office equipment and 40 years for the
building. When assets are retired or otherwise disposed of, the cost and related
accumulated  depreciation  are removed from the accounts, and any resulting gain
or  loss is reflected in income for the period. Repairs and maintenance which do
not extend the useful lives of the related assets are expensed as incurred.

PATENTS
   Registration   and   maintenance   costs   associated  with  the  filing  and
registration of patents are prepaid and amortized over its remaining life of the
patent,  not  to  exceed  20  years. Costs associated with patents which are not
approved  or  abandoned are expensed in the period in which such patents are not
approved  or  abandoned.  The  annual  maintenance fees associated with existing
patents  are  expensed  over 12 months and are included in Prepaid Expenses. The
Research  and  Development  costs  associated  with  the patented technology are
expensed as incurred and are not capitalized.

LONG-LIVED ASSETS
   The  Company  assesses long-lived assets for impairment as required under ASC
360-10,  Accounting  for  the  Impairment  or Disposal of Long-Lived Assets. The
Company  reviews  for  impairment whenever events or circumstances indicate that
the carrying amount of these assets may not be recoverable. The Company assesses
these  assets  for  impairment  based  on estimated future cash flows from these
assets.

REVENUE RECOGNITION
   Revenues  from  product  and  services  sales  are  recognized at the time of
shipment  or  services  rendered  provided  that  collection  of  the  resulting
receivable  is probable. Revenues from royalties are recognized upon the sale of
certain  products  by  licensees with whom the Company has licensing agreements.
Contract  Revenues,  which includes payments from Stand Still, Supply or Support
agreements  that  are  typically  based  on  time  frames, are recognized in the
periods  to  which  it  pertains. Deferred revenues are recorded when agreements
call for payment ahead of when the amounts are earned.

SHIPPING AND HANDLING CHARGES
   The  Company  includes  costs of shipping and handling billed to customers in
Revenues  and  the  related  expense  of  shipping and handling costs in Cost of
Sales.

ADVERTISING
   Advertising  costs  are expensed as incurred except for tangible assets, such
as  printed  advertising  materials, which are expensed as consumed. Advertising
expense  was  $47,340  and  $50,519  for the years ended June 30, 2010 and 2009,
respectively.

RESEARCH AND DEVELOPMENT
   Research and development costs, primarily employee salaries and benefits, are
charged  to operations when incurred and are included in operating expenses. The
amounts  charged  to  expense  for  the  years ended June 30, 2010 and 2009 were
$837,351 and $883,616, respectively.

STOCK BASED COMPENSATION
   The  Company  accounts  for  stock  and stock options issued for services and
compensation  to  employees under ASC 718-10. For non-employees, the fair market
value  of  the  Company's stock on the date of stock issuance or option/grant is
used.  The  Company determines the fair market value of the options issued under
the Black-Scholes Pricing Model. Under the provisions of ASC 718-10, share-based
compensation  cost is measured at the grant date, based on the fair value of the
award,  and  is  recognized  as an expense over the employee's requisite service
period  (generally  the  vesting period of the equity grant). There were no such
stock  option  grants  issued  during the years ended June 30, 2010 and June 30,
2009.

INCOME TAXES
  Income  taxes are provided for the tax effects of transactions reported in the
financial  statements  and  consist  of  taxes currently due plus deferred taxes
related primarily to differences between the bases of assets and liabilities for

                                      F-5
<PAGE>
financial  and  income  tax  reporting.  The deferred tax assets and liabilities
represent  the  future  tax return consequences of those differences, which will
either be taxable or deductible when the assets and liabilities are recovered or
settled.  Deferred  taxes  are  also  recognized  for  operating losses that are
available  to offset future federal and state income taxes. Any interest charges
on  underpayment  or  other  assessments  are  recorded as interest expense. Any
penalties are recorded in Operating Expenses.

  Effective  January  1, 2007, the Company adopted the provisions of ASC 740-10,
Accounting for Uncertainty in Income Taxes. The implementation of ASC 740-10 had
no  impact  on  the  Company's  financial  statements  as  the  Company  has not
recognized any uncertain income tax positions.

EARNINGS PER SHARE
   Earnings per share, in accordance with the provisions of ASC 260-10, Earnings
Per  Share, is computed by dividing net income by the weighted average number of
common stock shares outstanding during the period.

USE OF ESTIMATES
   The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect  the  reported  amounts  of  assets  and  liabilities  and  disclosure of
contingent  assets  and  liabilities at the date of the financial statements and
the  reported  amounts  of  revenues  and  expenses during the reporting period.
Actual results could differ from those estimates.

--------------------------------------------------------------------------------

2. CONCENTRATION OF CREDIT AND BUSINESS RISK

  The  Company  is  exposed  to  additional credit and business risks due to its
concentration of activity with certain parties. For example, at times throughout
the  year,  the  Company  may  maintain  certain bank accounts in excess of FDIC
insured limits.

  In  addition,  the Company provides credit in the normal course of business to
customers.  Ongoing  credit  evaluations  of  its  customers  are performed, and
allowances  for  doubtful  accounts  are based on factors surrounding the credit
risk of specific customers, historical trends and other information.

  For  the  year  ended  June  30, 2009, the Company collected Contract Revenues
totaling  10%  of  its  total  revenues  from one customer, Cordis Neurovascular
Systems.  The  outstanding  accounts receivable from Cordis at June 30, 2009 was
$35,000. There were no significant customers for the year ended June 30, 2010.

--------------------------------------------------------------------------------

3. FAIR VALUE

In accordance with ASC 820-10, the following table represents the Company's fair
value  hierarchy for its financial assets and liabilities measured at fair value
on a recurring basis as of June 30, 2010 and June 30, 2009, respectively:

----------------- ----------- ----------- ----------- ------------
as of June 30, 2010     Level 1     Level 2     Level 3       Total
                        -------     -------     -------       -----
ASSETS
    Investments         $  440,000      -           -       $  440,000
                        ----------                          ----------
Total Assets            $  440,000      -           -       $  440,000
                        ==========                          ==========

LIABILITIES - n/a             -         -           -              -
-----------------       ----------- ----------- ----------- ------------

----------------- ----------- ----------- ----------- ------------
as of June 30, 2009     Level 1     Level 2     Level 3       Total
                        -------     -------     -------       -----
ASSETS
    Investments         $  450,000      -           -       $  450,000
                        ----------                          ----------
Total Assets            $  450,000      -           -       $  450,000
                        ==========                          ==========

LIABILITIES - n/a             -         -           -              -
-----------------       ----------- ----------- ----------- ------------

                                      F-6
<PAGE>
Some  of the Company's financial instruments are not measured at fair value on a
recurring  basis  but are recorded at amounts that approximate fair value due to
their   liquid  or  short-term  nature,  such  as  cash  and  cash  equivalents,
receivables and payables. The carrying amount of the mortgage is consistent with
the terms available in the market for instruments with similar risk.

4. INVENTORY

Following  the  final  sale  of  the  Biosearch  Medical Products medical device
product lines during the fiscal year, inventory as of

June 30, 2010 consists of:
------------------------------------------------------------
                                        June 30,
                                   2010          2009
                                   ----          ----
Finished goods                $     98,690  $     97,746
Work in process                        202       246,002
Raw materials                      149,677       272,101
                                -----------   -----------
                              $    248,569  $    615,849
                                ===========   ===========

------------------------------------------------------------


5.   PROPERTY AND EQUIPMENT

Reflecting  the  write-off  of  1,743,800  in  fully  depreciated  equipment and
fixtures  as  they  are  no  longer in service, and other activity, property and
equipment consists of the following:

-------------------------------------------------------------
                                         June 30,
                                     2010          2009
                                     ----          ----
Land                           $     472,410 $     472,410
Building                           2,307,449     2,223,011
Machinery and equipment            2,164,899     3,968,307
Equipment under capital leases        86,729        87,120
Furniture and fixtures               204,027       552,228
                                     -------       -------
                                   5,235,514     7,303,076
Less: Accumulated
   depreciation and               (2,220,742)   (4,152,299)
amortization

         Accumulated
   depreciation on capital           (26,236)      (15,760)
leases
                                 ------------  ------------
Property and Equipment, net    $   2,988,536 $   3,135,017
                                 ============  ============

-------------------------------------------------------------

  Depreciation  expense,  including  that  on  assets  under capitalized leases,
charged  to  operations,  was $225,051 and $241,908 for the years ended June 30,
2010 and 2009, respectively. In addition to the write off of $1,743,800 in fully
depreciated  equipment  and  fixtures  during  the  year  ended  June  30, 2010,
approximately  $567,000  in  equipment  (approximately  $413,000  in accumulated
depreciation)  was  sold  as part of the product lines sold to Forefront Medical
Technology (PTE) Ltd. (see Footnote 14).

6. INTANGIBLE ASSETS

Intangible  Assets, including prepaid Patent Costs included in Prepaid Expenses,
are comprised of the following:








                                      F-7
<PAGE>
------------------------------------------------------------
                                            June 30,
                                        2010         2009
                                        ----         ----
Patents                            $ 1,403,865  $ 1,255,486
Trademarks                              66,218       21,860
   Less: Accumulated amortization     (546,866)    (465,333)
                                     -----------  -----------
Intangible Assets, net             $   923,217  $   812,013
                                     ===========  ===========

------------------------------------------------------------

   During  the  year  ended  June 30, 2009, $167,252 of patent costs were deemed
impaired  and  charged  off  to Operating Expenses as the discounted future cash
flows  relating  to  these patents were deemed below that of its carrying value.
For  some  of  the  patents,  the  Company continues to maintain and support the
patents  despite  their  carrying value having been written off. During the year
June  30, 2009, $72,955 of fully amortized trademark costs have been written off
as  the  periods  to  which  it covers expired. For the year ended June 30, 2010
there  were  no  patent  costs  nor trademark costs deemed impaired (and thereby
written off).

Future amortization of Intangible Assets, as of June 30, 2010, are as follows:

     ----------------------------------------------------
        Year ending June 30,
        --------------------
              2011                          $ 141,286
              2012                             96,739
              2013                             94,507
              2014                             88,280
              2015                             82,911
              Thereafter                      419,494
                                              --------
                                            $ 923,217
                                              ========

     ----------------------------------------------------
  Amortization  expense for the years ended June 30, 2010 and 2009 were $205,937
and $233,102, respectively.

7. LEASES

  The Company acquired equipment under long-term leases. For financial reporting
purposes, the present value of the minimum lease payments has been capitalized.

  Future  payments under these capital lease arrangements, which includes $7,542
  in finance charges, are as follows:

    ---------------------------------------------------

    Year ending June 30,
    --------------------

        2011                              $   20,506
        2012                                  20,506
        2013                                  17,246
                                            ---------
                                          $   58,258
                                            =========

    ---------------------------------------------------



8.   LONG-TERM DEBT AND CREDIT FACILITY

  As of June 30, 2010, the Company's facility was financed by a twenty-five year
mortgage  note  bearing a five year fixed interest rate of 6.75%, and then reset
every  five  years  at  2.75% over the then New York Federal Home Loan Bank 5/20
Amortizing  Advance  Rate.  The  mortgage  is  secured  by  the  real estate and
improvements,  and  all  rents  from leases subsequently entered into, amortized
with  monthly  payments.  As of June 30, 2010, the book value of the real estate
and improvements was $2,266,374.

                                      F-8
<PAGE>
  The  mortgage,  for $2,900,000, refinanced two ten-year mortgages in September
2008,  provided  for  an additional $1.1 million in cash for use in repaying its
maturing Line-of-Credit facility and as additional working capital.


Long-term debt is comprised of the following:
-------------------------------------------------------------
                                       June 30,
                                    2010           2009
                                 ------------  -------------
Mortgage note                  $  2,817,836  $   2,865,751
    Less:  Current Maturities       (48,800)       (45,696)
                                 ------------  -------------
Long-term Debt,
    Net of Current Maturities  $  2,769,036  $   2,820,055
                               ============  =============

--------------------------------------------------------------

Maturities of the long-term debt are as follows:

          Year ending June 30,          As of June 30, 2010
          --------------------         --------------------
              2011                    $      48,800
              2012                           51,720
              2013                           55,899
              2014                           59,847
              2015                           64,074
              Thereafter                  2,537,496
                                        ------------
                                      $   2,817,836
                                        ============

          --------------------------------------------

At  June 30, 2010, the Company did not meet two mortgage covenants. In September
2010,  the  bank  granted  loan covenant modifications so that the Company is no
longer in violation.

9. INCOME TAXES

The income tax provision (benefit) is comprised of the following:

---------------------------------------------------------------
                            Federal      State       Total
                            ---------   ---------  ----------
YEAR ENDED JUNE 30, 2010
    CURRENT               $      -    $   4,160  $    4,160
    DEFERRED               (355,096)   (110,702)   (465,798)
                            ---------   ---------  ----------
                          $(355,096)  $(106,542) $ (461,638)
                            =========   =========  ==========
Year Ended June 30, 2009
    Current               $  59,540   $  16,351  $   75,891
    Deferred                194,000     (88,778)    105,222
                            ---------   ---------  ----------
                          $ 253,540   $ (72,427) $  181,113
                            =========   =========  ==========
---------------------------------------------------------------
The  Company's  deferred  tax  asset and liability as presented in the Company's
financial statements are comprised of the following:

------------------------------------------------------------














                                      F-9
<PAGE>
                                                 June 30,
                                             2010        2009
Deferred Tax Asset
    Net Operating Losses                $   514,684  $  225,749
    Adjustment of Goodwill                  196,069     196,069
    Research & Development                  597,261     405,213
Credits
    Valuation allowance                    (296,069)   (296,069)
                                         -----------  ----------
      Total Deferred Tax Assets           1,011,945     530,962
                                         ===========  ==========
Deferred Tax Liability
    Depreciation                           (318,375)   (285,858)
                                         -----------  ----------
      Total Deferred Tax Liability      $  (318,375) $ (285,858)
                                         ===========  ==========
-------------------------------------------------------------
  Deferred  taxes  are recognized for temporary differences between the bases of
assets  and  liabilities  for  financial  statement and income tax purposes. The
differences   relate   primarily   to   depreciable  assets  (using  accelerated
depreciation  methods  for  income  tax  purposes).  The Company's adjustment to
Goodwill  in  2004  and 2006 created a deferred tax asset, which although has an
indefinite  life,  has  been fully reserved for as realization of its benefit is
unlikely.

  As  of  June  30,  2010,  the Company has net operating loss carry forwards of
approximately  $1,125,105  and  $1,468,311  for  Federal  and State tax purposes
respectively.  These  net  operating  loss  carry forwards may be used to reduce
federal  and state taxable income and tax liabilities in future years and expire
in  various  years through June 30, 2028 and June 30, 2016 for Federal and State
tax   purposes,   respectively.  In  addition,  the  Company  has  Research  and
Development  Tax  Credits of approximately $356,317 and $240,944 for Federal and
State tax purposes, respectively, which expire in various years through June 30,
2030 and June 30, 2017, respectively.

  The  Company's  provision for income taxes differs from applying the statutory
U.S.  federal  income  tax  rate  to the income before income taxes. The primary
differences  result  from  providing  for  state  income  taxes,  generation  of
allowable  tax  credits  and  from  deducting  certain  expenses  for  financial
statement purposes but not for federal income tax purposes.

   A reconciliation between taxes computed at the federal statutory rate and the
   consolidated effective tax rate follows:

     --------------------------------------------------------
                                            June 30,
                                            --------
                                         2010      2009
                                         ----      ----

     Federal statutory tax rate        (34.0) %    34.0  %
     State income tax - net of
        federal tax benefit             (2.6)      (0.8)
     R & D credits                      (7.2)      (4.5)
     Permanent and other differences    (1.4)      (2.2)
                                        -----      -----
                                       (45.2) %    26.5  %
                                       ======      ======

     -------------------------------------------------------

10.   STOCK OPTIONS AND AWARDS

  On  February  22,  2000  the  Board  of Directors approved an option plan that
granted  each  director  2,000  fully  vested options for each meeting attended,
awarded at the annual meeting at the 5-day market price average.











                                      F-10
<PAGE>
  Open options under this plan awarded to the Board of Directors are as follows:

----------------- -------- --------- ------------- ----------
    Issuance      Options  Exercise  Expiration    Options
      Date         Issued    Price      Date      Exercised

  Nov 16, 2005     62,000    $0.95  Nov 16, 2010       -
  Nov 15, 2006     50,000    $1.18  Nov 15, 2011       -
----------------- -------- -------- -------------- ----------
  During the 2008 fiscal year, 15,000 fully vested five year options, at a $3.00
exercise price, were granted as part of a Stock Subscription.

  There  were  no  other  stock  option issuances during the 2009 or 2010 fiscal
year.

  A  summary  of  activity under the plan for the years ending June 30, 2009 and
 2010 are as follows:

   -------------------------------------------------------
                       Common Stock Options Outstanding
                       --------------------------------
                                       Weighted Average
                               Shares  Exercise Price
                               ------  --------------
      Balance, June 30, 2008  235,000       $ 1.44
        Cancelled             (52,000)        1.10
                              ---------     -------
      Balance, June 30, 2009  183,000       $ 1.53
        Cancelled             (56,000)        2.10
                              ---------     -------
      BALANCE, JUNE 30, 2010  127,000       $ 1.28
   ------------------------------------------------------
Following is a summary of the status of options outstanding as of June 30, 2010:

-----------------------------------------------------------
           Outstanding Options              Exercisable Options
---------------------------------------  -- --------------------
                          Weighted
                          Average       Weighted           Weighted
  Exercise               Remaining      Average            Average
   Price                 Contractual    Exercise           Exercise
   Range        Number      Life         Price    Number    Price
   -----       --------     ----         -----    ------    -----
$0.95 - $1.18   112,000   0.8 years      $1.05    112,000   $1.05
   $3.00         15,000   2.1 years      $3.00     15,000   $3.00
                -------   ---------      -----    -------   -----
                127,000   1.0 years      $1.28    127,000   $1.28

-----------------------------------------------------------
As  the  stock  price of the Company's stock on June 30, 2010 was lower than the
exercise  prices  of  the  outstanding  and  exercisable  options,  there was no
intrinsic value of the options.

11. RETIREMENT PLAN

  The  Company  sponsors a qualified 401(k) plan covering substantially all full
time  employees  under  which  eligible  employees  can defer a portion of their
annual  compensation.  The  Company  determines annually, the amount of matching
contributions.  There  were  no  Company  matching contribution made to the plan
during the fiscal years ended June 30, 2009 or June 30, 2010.

12. INDUSTRY SEGMENT INFORMATION

  The  Company  operates two primary business segments: (1) Polymer Research and
(2) Medical Products.

  Products   included   in   the   polymer  research  segment  are  Aquamere(R),
Aquatrix(R),   Dermaseal(R),  Dragonhyde(R),  Hydromer(R)  Anti-Fog/Condensation
Control  Coatings,  Hydromer(R)  Lubricious Coatings, Sea-Slide(R) and T-HEXX(R)
Barrier  Dips  and  Sprays.  Research  and  Development  services and all of the
Company's royalties and contract revenues are reported in this segment.

  The  medical  products  segment  included  an  OEM  product  line  of  bipolar
coagulation  probes,  placement  catheters,  bilary  stents, jejunal and enteral
feeding  accessories,  guidewires,  biofeedback  devices  for  fecal and urinary
incontinence  and  other  endoscopic  accessories.  With  the  exception  of the

                                      F-11
<PAGE>
biofeedback  devices,  all  the medical device product lines were sold in fiscal
2009  and  2010.  Remaining  in  this  segment are contract coating services and
engineering services.

  Due  to  the  multitude of products offered and the product gross margins, the
Company does not track sales contribution by products.

  The  Company  operates  globally  in its segments with several large customers
that  are important to their operating results. No single customer accounted for
more  than  10%  of the polymer research segment sales for the fiscal year 2010.
One  such  customer  accounted  for 14% of the segment sales for the 2009 fiscal
year.  For  the  medical products segment, the top three customers accounted for
87% and 65% of that segment's 2010 and 2009 sales, respectively.

  The  Company  evaluates  the segments by revenues, total expenses and earnings
before  income taxes. The Company's assets are not reviewed by business segment.
The  accounting  policies  of  these  segments  are  described in the summary of
significant accounting policies.

  Corporate  Overhead, primarily the salaries and benefits of senior management,
support  services  (Accounting, Legal, Human Resources and Purchasing) and other
shared  services (building maintenance and warehousing), is reflected separately
from the results of the business segments in the following:

--------------------------------------------------------------
                 Polymer     Medical        Corporate
                 Research    Products       Overhead       Total
                 ----------  ----------     ---------    ----------
YEAR ENDED JUNE 30, 2010
REVENUE        $4,136,010  $2,064,494                  $ 6,200,504
EXPENSES       (3,738,588) (1,912,662)    (1,570,244)   (7,221,494)
               ----------- -----------    -----------   -----------
EARNINGS
(LOSS)
BEFORE
INCOME TAXES   $  397,422   $ 151,832   $ (1,570,244)  $(1,020,990)
                  =======     =======     ===========   ===========

Year Ended June 30,
2009
Revenue        $4,405,662  $3,346,345                  $ 7,752,007
Expenses       (3,596,822) (1,887,180)    (1,583,675)   (7,067,677)
               ----------- -----------     ----------   -----------
Earnings
(Loss)
before
Income Taxes   $  808,840  $1,459,165   $ (1,583,675)  $   684,330
                  =======   =========     ===========      =======



--------------------------------------------------------------
   Included  under  the  Polymer Research segment was the non-cash impairment of
intangible assets of $167,252 for fiscal year 2009. There was no such impairment
for fiscal year 2010.

   Included  under  the  Medical Products segment were the pre-tax gain from the
sale  of  product  lines  of  $335,629  and  $1,293,348 in fiscal 2010 and 2009,
respectively.

Geographic revenues were as follows for the years ended June 30,

                           2010             2009
                           ----             ----
       Domestic             72%              83%
       Foreign              28%              17%



13.  EARNINGS PER SHARE

  The following table sets forth the computation of earnings per share:







                                      F-12
<PAGE>
--------------------------------------------------------------------------------
                                                        2010        2009
                                                      --------   ---------
Numerator:
    Net (loss) income                                 (559,352) $  503,217
                                                      =========    =======
Denominator:
   Denominator for basic earnings per share          4,772,318   4,772,318
    - weighted average shares outstanding

Effect of dilutive securities - Stock Options               -         -

Denominator for dilutive earnings per share
    under the treasury stock method
    - weighted average shares outstanding            4,772,318   4,772,318

Basic (Loss) Earnings per share                          (0.12) $ 0.11
Dilutive Earnings per share                                n/a  $  n/a

--------------------------------------------------------------------------------
   Common stock equivalents (consisting of 127,000 and 183,000 stock options for
the  years  ended  June  30,  2010  and 2009, respectively) were not included in
computing   diluted   earnings  per  share  as  their  effect  would  have  been
anti-dilutive.

14. SALE OF PRODUCT LINES

  On November 25, 2009, the Company's wholly owned subsidiary, Biosearch Medical
Products,  Inc.  ("Biosearch")  sold  its Private Label Jejunostomy Catheter and
Nasogastric  Feeding Catheter business to Forefront Medical Technology (PTE) Ltd
("Forefront"),  a  wholly  owned subsidiary of Vicplas International Limited - a
company  registered  in  the  Republic  of Singapore, for $800,000 in cash, half
received upon closing with the balance received in March 2010.

  This  sale  included inventory and equipment related to that business and also
called for the assignment of certain customer supply agreements to Forefront and
a  three year non-compete provision. A separate supply agreement for Hydromer(R)
hydrophilic coating solution used on those products was also entered between the
parties.  Biosearch  continued  manufacturing  the  products,  at an agreed upon
transfer price, until Forefront completed the transition in April 2010.

  On  February 20, 2009, Biosearch sold the Endoscopic Bipolar Coagulation probe
and  Biliary  Stent  business  to  Merit  Medical  Systems,  Inc.  ("Merit") for
$1,600,000  in  cash.  The sale included inventory and equipment related to that
business  and  also  called  for  the  assignment of existing Biosearch customer
supply  agreements  to  Merit,  a  seven year non-compete provision and a supply
agreement  for  Hydromer(R) hydrophilic coating solution used on those products.
Under  a  separate transfer price agreement, the Company continued manufacturing
the  products  solely  for  Merit,  until  October  2009 when Merit was ready to
independently manufacture the products.

  The  product  lines  sold  were  part  of  the "Medical Products" segment (see
Footnote  12)  in  which  operations  and  cash  flows  could not be broken down
further.  Therefore,  along  with the continued manufacturing for both Forefront
and  Merit,  these  transactions  did  not  meet  the  criteria  of discontinued
operations under ASC 205-20, Discontinued Operations.

  The  gains  on  sale  of  the  product  lines  are reflected separately on the
Consolidated Statement of Operations.

15. CONTINGENCIES

  Royalty  revenues  and  support  fees recorded by the Company are based on the
sales  of products as reported by the Company's customers, which has the risk of
being  under- or over-reported. To minimize such risks, the Company's management
utilizes  its knowledge and understanding of the customer's business, the market
and  other  pertinent factors in assessing the validity of reported royalties or
support  fees.  In  addition,  the Company may have a right to audit the amounts
reported.

  The  Company  has  not  received  any  claims  by  its  customers for possible
overpayment of royalties or support fees.





                                      F-13
<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).

<PAGE>
      10.t Lease Renewal Agreement dated April 15, 1985 between Salem Realty and
the  Company  (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,

<PAGE>
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  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).


<PAGE>
      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. (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

      10.bq  Contract of sale between Biosearch Medical Products and the Company
for the sale of 35 Industrial Parkway dated 3/31/98

      10.br Note and mortgage with PNC Bank dated 6/12/98

      10.bs 3 year lease agreement with Biosearch Medical Products dated 6/12/98
for 35 Industrial Parkway

      10.bt  License  of  technology,  supply  and stock purchase agreement with
C.R.Bard dated 2/25/99

      10.bu Trademark and technology license agreement with AST dated 3/9/99

      10.bv License of two gel patents from Ridge Scientific dated 11/1/98

      10.bw License and Supply agreement with Gallini SRL dated 6/28/00

      10.bx Standstill agreement with license option with IMED Pharma Inc. dated
3/30/00

      10.by License of technology with Symbiotech Medical Inc. dated 3/28/00

      10.bz License and supply agreement with TP Orthodontics Inc. dated 3/30/00

      10.ca  License  Agreement  dated July 1, 2000 between Becton Dickinson and
Company, Inc. and the Company.

      10.cb  License Agreement dated January 1, 2001 between LHS Limited and LHS
Holding Limited, English dba KLEENCARE and the Company.

      10.cc License Agreement dated April 17, 2001 between Tyco Healthcare Group
LP and the Company.

         10.cd Construction Contract dated April 19,  2001 between REDCO
Engineering & Construction Corp and the Company.

      10.ce Service Agreement dated April 23, 2001 between Tyco Healthcare Group
LP and the Company.

      10.cf Loan Agreement dated June 7, 2001 between New Millenium Bank and the
Company.

<PAGE>
      10.cg By-Laws Articles of Incorporation.

      10.ch  Loan  Agreement dated June 30, 2005 between Wachovia Bank, N.A. and
the Company.

      10.ci  Asset  Purchase  and  Supply  Agreement dated February 2009 between
Merit Medical Systems, Inc. and the Company

      10.cj  Asset  Transfer  Agreement  dated  November  2009 between Forefront
Medical Technology (PTE) Ltd and the Company

      24.  Power  of  Attorney  (see "Power of Attorney" in the Annual Report on
Form 10-K).

      31.1  Certification  of Manfred F. Dyck, Chief Executive Officer, pursuant
to Securities Exchange Act Rule 13a-14(a).

      31.2  Certification of Robert Y. Lee, Chief Financial Officer, pursuant to
Securities Exchange Act Rule 13a-14(a).

      32.1 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant
to  Section  906  of  the Sarbanes-Oxley Act of 2002, signed by Manfred F. Dyck,
Chief Executive Officer of Hydromer, Inc.

      32.2 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002, signed by Robert Y. Lee, Chief
Financial Officer of Hydromer, Inc.



















































<PAGE>
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Vicario,  P.P.,  Lu,  Z.,  Wang, Z., Merritt, K., Buongiovanni, D. and Chen, P.,
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         Journal  Biomedical  Materials Research: Part B - Applied Biomaterials,
         2008, 86B, pp 136-144

Vicario,  P.P.,  Wang,  B.,  Pascoe J., Grigorian I., Lu, Z., DeRose, M. and von
         Dyck,  S.,  "Methods for Evaluating the Properties and Efficacy of Teat
         Dip  Formulations Designed as Barriers to Microorganisms during the Dry
         Period"  NMC  49th  Annual  Meeting Proceedings, January 31-February 3,
         2010, Albuquerque, NM, Poster Session, February 2010

Wu,  Gang;  Wan,  Changxiu;  Duan, Yourong and Yue, Yilun "Researches on Surface
  Modification   for   Prevention   of   Bacterial   Adhesion   to  Implementing
  Biomaterials"  Implanting Journal of Biomedical Engineering, 2000, Vol. 1, No.
  17






























































<PAGE>















                      ASSET PURCHASE AND SUPPLY AGREEMENT

                                  BY AND AMONG

                          MERIT MEDICAL SYSTEMS, INC.

                        BIOSEARCH MEDICAL PRODUCTS, INC.

                                      AND

                                 HYDROMER, INC.

                               FEBRUARY 19, 2009


















































<PAGE>
                               TABLE OF CONTENTS
                               -----------------


     1.  DEFINITIONS...........................................................1
         -----------

     2.  BASIC TRANSACTIONS....................................................1
         ------------------

             (a) Transactions..................................................1
                 ------------

             (b) Assumption/Exclusion of Liabilities...........................1
                 -----------------------------------

             (c) Consideration Provided by Buyer for Acquired Assets...........1
                 ---------------------------------------------------

             (d) ConMed Distribution Agreement Conditions......................1
                 ----------------------------------------

             (e) Allocation of Purchase Price..................................1
                 ----------------------------

             (f) The Closing...................................................1
                 -----------

             (g) Deliveries at the Closing.....................................1
                 -------------------------

     3.  REPRESENTATIONS AND WARRANTIES OF SELLERS.............................1
         -----------------------------------------

             (a) Organization of Seller........................................1
                 ----------------------

             (b) Authorization of Transaction..................................1
                 ----------------------------

             (c) Noncontravention..............................................1
                 ----------------

             (d) Title to Assets; Sufficiency of Assets........................1
                 --------------------------------------

             (e) No Adverse Change.............................................1
                 -----------------

             (f) Legal Compliance..............................................1
                 ----------------

             (g) Intellectual Property.........................................1
                 ---------------------

             (h) Environmental, Health, and Safety Matters.....................1
                 -----------------------------------------

             (i) Contracts.....................................................1
                 ---------

             (j) Litigation....................................................1
                 ----------

             (k) Product Warranty..............................................1
                 ----------------

             (l) Product Liability.............................................1
                 -----------------

             (m) Customers and Suppliers.......................................1
                 -----------------------

             (n) Pre-Closing Representations...................................1
                 ---------------------------

             (o) Broker Fees...................................................1
                 -----------

     4.  REPRESENTATIONS AND WARRANTIES OF BUYER...............................1
         ---------------------------------------

             (a) Organization of Buyer.........................................1
                 ---------------------

             (b) Authorization of Transaction..................................1
                 ----------------------------

             (c) Noncontravention..............................................1
                 ----------------

             (d) Brokers' Fees.................................................1
                 -------------

             (e) Financial Status..............................................1
                 ----------------

     5.  CONDITIONS TO CLOSING.................................................1
         ---------------------

             (a) Conditions to Obligation of Buyer.............................1
                 ---------------------------------

             (b) Conditions to Obligation of Sellers...........................1
                 -----------------------------------

     6.  PRE-CLOSING COVENANTS.................................................1
         ---------------------

             (a) General.......................................................1
                 -------

             (b) Notices and Consents..........................................1
                 --------------------

             (c) Operation of Business.........................................1
                 ---------------------

             (d) Full Access...................................................1
                 -----------

             (e) Notice of Developments........................................1
                 ----------------------

             (f) No Participation or Solicitation of Competing Transaction.....1
                 ---------------------------------------------------------

             (g) Completion of Non-assignable Agreements.......................1
                 ---------------------------------------

     7.  POST-CLOSING COVENANTS................................................1
         ----------------------

             (a) General.......................................................1
                 -------

             (b) Litigation Support............................................1
                 ------------------

             (c) Customers and Vendors.........................................1
                 ---------------------

             (d) Confidentiality...............................................1
                 ---------------

             (e) Transfer of Assets............................................1
                 ------------------

     8.  REMEDIES FOR BREACHES OF THIS AGREEMENT...............................1
         ---------------------------------------

             (a) Survival of Representations and Warranties....................1
                 ------------------------------------------

             (b) Indemnification Provisions for Benefit of Buyer and Sellers...1
                 -----------------------------------------------------------

             (c) Matters Involving Third Parties...............................1
                 -------------------------------

             (d) Characterization of Payments..................................1
                 ----------------------------

     9.  SUPPLY AGREEMENT......................................................1
         ----------------

             (a) Supply of Acquired Products...................................1
                 ---------------------------

             (b) Manufacture...................................................1
                 -----------

             (c) Inspection....................................................1
                 ----------

             (d) Records.......................................................1
                 -------

             (e) Labeling......................................................1
                 --------

             (f) Purchases and Pricing.........................................1
                 ---------------------

             (g) Regulatory Status.............................................1
                 -----------------

             (h) Regulatory; Complaints; Failure Analysis......................1
                 ----------------------------------------

             (i) Recalls.......................................................1
                 -------

             (j) Quality Assurance Inspections.................................1
                 -----------------------------

             (k) No Change to Acquired Products................................1
                 ------------------------------

             (l) Quality System Regulation.....................................1
                 -------------------------

             (m) Remedies......................................................1
                 --------

             (n) Product Liability Insurance...................................1
                 ---------------------------

             (o) Limitation of Liability.......................................1
                 -----------------------

     10. TERMINATION...........................................................1
         -----------

             (a) Termination of Agreement......................................1
                 ------------------------

             (b) Effect of Termination.........................................1
                 ---------------------

     11. MISCELLANEOUS.........................................................1
         -------------

             (a) Press Releases and Public Announcements......................25
                 ---------------------------------------

             (b) No Third-Party Beneficiaries..................................1
                 ----------------------------

             (c) Entire Agreement..............................................1
                 ----------------

             (d) Succession and Assignment.....................................1
                 -------------------------

             (e) Counterparts..................................................1
                 ------------

             (f) Headings......................................................1
                 --------

             (g) Notices.......................................................1
                 -------

             (h) Governing Law; Jurisdiction...................................1
                 ---------------------------

             (i) Amendments and Waivers........................................1
                 ----------------------

             (j) Severability..................................................1
                 ------------

             (k) Expenses......................................................1
                 --------

             (l) Construction..................................................1
                 ------------

             (m) Incorporation of Exhibits and Schedules.......................1
                 ---------------------------------------

             (n) Specific Performance..........................................1
                 --------------------

             (o) Waiver of Trial By Jury.......................................1
                 -----------------------

             (p)       Transfer Taxes.........................................28


         Exhibit A                         Acquired Assets
         Exhibit B                         Acquired Intellectual Property
         Exhibit C                         Allocation of the Purchase Price
         Exhibit D                         Bill of Sale
         Exhibit E                         Assignment and Assumption of Acquired
                                                Contracts
         Exhibit F                         License Agreement
         Exhibit G                         Non-Compete Agreement
         Exhibit H                         Supply Agreement Pricing and Terms
         Disclosure Schedule               Exceptions to Representations and
                                                Warranties of Sellers

































<PAGE>
                      ASSET PURCHASE AND SUPPLY AGREEMENT

      This  Asset  Purchase  and  Supply Agreement (this "Agreement") is entered
into  as  of February [___], 2009, by and between Merit Medical Systems, Inc., a
Utah  corporation ("Buyer" or "Merit"), Hydromer, Inc., a New Jersey corporation
having  its principal place of business at 35 Industrial Parkway, Branchburg, NJ
08876   ("Hydromer")   and  Biosearch  Medical  Products,  Inc.,  a  New  Jersey
corporation  having  its  principal  place of business at 35 Industrial Parkway,
Branchburg,   NJ  08876,  ("BioSearch,"  and  collectively  with  Hydromer,  the
"Sellers").  BioSearch  is  a  wholly-owned  subsidiary  of  Hydromer. Buyer and
Sellers are referred to collectively herein as the "Parties" and individually as
a "Party."

                                    RECITALS

      A.  Sellers  are  in  the  business  of,  among  other things, developing,
manufacturing and distributing medical devices, including the endoscopic bipolar
coagulation probe and the Hydromer grafted indwelling plastic biliary stent.

      B.  Sellers desire to sell the Acquired Products (defined below) and other
assets  related thereto to Buyer, and Buyer desires to purchase such assets from
Sellers,  in exchange for the consideration set forth herein, all upon the terms
and subject to the conditions of this Agreement.

      C.  Sellers  desire  to  manufacture  the Acquired Products and supply the
Acquired  Products  to Buyer during the period beginning on the Closing Date and
ending  on  the  date  Buyer  can successfully and independently manufacture the
Acquired Products in accordance with the standards set forth herein.

      D.  Sellers  and  Buyer  are  willing  to  make  certain  representations,
warranties,  covenants and agreements in connection with such sale, purchase and
supply.

                                   AGREEMENT

      NOW,  THEREFORE,  in consideration of the premises and the mutual promises
herein  made,  and  in  consideration  of  the  representations, warranties, and
covenants herein contained, the Parties agree as follows:

      1.  Definitions.  For purposes of this Agreement, the following terms have
the meanings set forth below:

      "Acquired  Assets" means each of the following, as of the Closing Date (a)
all  right,  title,  and  interest  in and to all of the assets owned by Sellers
described on Exhibit A, whether in the possession of Seller or in the possession
of  a  third  party; (b) all Inventory and similar items related to the Acquired
Products;  (c) all Manufacturing Assets; (d) all Acquired Intellectual Property;
(e)  all  worldwide  regulatory  documentation  and  submissions with associated
approval  documentation,  including without limitation FDA 510(k) registrations,
pre-market   notifications,  approvals,  clearances,  applications,  extensions,
renewals,  and CE dossiers and registrations exclusively related to the Acquired
Products  (together  "Regulatory  Documentation");  (f)  all approvals, permits,
licenses,  orders,  registrations,  certificates,  variances, and similar rights
obtained from governments and governmental agencies within the United States and
foreign  jurisdictions  related exclusively to the Acquired Products; (g) books,
records,  ledgers, files, documents, correspondence, lists, plans, drawings, and
specifications  related to the Acquired Intellectual Property, including without
limitation  all  regulatory  filings  and  filing  histories;  (h)  all creative
materials, advertising and promotional materials, designs, studies, reports, and
other  printed, video, electronic or written materials and all packaging related
exclusively  to  the  Acquired  Products;  (i) all customer, vendor and supplier
lists  for  all  orders  of  the  Acquired Products, order histories and contact
information  of  such  customers, complaint files, sterilization validations and
all other information related to the Acquired Products; (j) all goodwill related
exclusively to the Acquired Assets; and (k) the Acquired Contracts.

      "Acquired  Contracts"  means  all  contracts,  leases,  licenses and other
agreements  or  arrangements  of  Sellers  related  exclusively  to the Acquired
Products, all of which are listed on Section 3(i) of the Disclosure Schedule.

      "Acquired  Products"  shall  mean the endoscopic bipolar coagulation probe
specifically  defined  by  FDA  510K  numbers  k912129/A  & k921029 and Hydromer
grafted plastic indwelling biliary stent specifically defined by FDA 510K number
k901582.




<PAGE>
      "Acquisition Proposal" shall mean any proposal or offer made by any Person
other  than  the  Buyer  or any Affiliate thereof to acquire any of the Acquired
Assets.

      "Adverse  Consequences"  means all damages, dues, penalties, fines, costs,
amounts  paid  in  settlement, obligations, taxes, Encumbrances, losses or fees,
together  with  all  reasonable  expenses and fees, including without limitation
court costs and attorneys' fees and expenses, arising out of any actions, suits,
proceedings,  hearings, official inquiries, investigations, charges, complaints,
claims, demands, injunctions, judgments, orders, decrees or rulings.

      "Acquired  Intellectual Property" means all Intellectual Property embodied
in,  used by, or otherwise related to the Acquired Assets, or otherwise owned or
used  by  Sellers  in  connection  with  the  business of the Acquired Products,
including,  but  not  limited to, the items described on Exhibit B (if any), but
excluding the Licensed Intellectual Property.

      "Affiliate"  has  the  meaning  set  forth in Rule 12b-2 of Regulation 12B
promulgated under the Securities Exchange Act.

      "Assumed  Liabilities" shall have the meaning set forth in Section 2(b)(i)
below.

         "Closing" has the meaning set forth in Section 2(f) below.

         "Closing Date" has the meaning set forth in Section 2(f) below.

      "Confidential  Information"  means  any information regarding the business
and affairs of Sellers or Buyer that is not generally available to the public on
the  date  hereto.  Information that may be included in Confidential Information
includes,  but  is  not  limited  to,  matters  of a technical nature (including
Intellectual  Property,  know-how,  computer  programs,  software,  patented and
unpatented  technology,  source-code,  accounting  methods,  and documentation),
matters  of  a business nature (such as information about contract forms, costs,
profits,  employees,  promotional  methods,  markets, market or marketing plans,
sales,  and  client  accounts),  plans  for  further  development, and any other
information meeting the definition of Confidential Information set forth above.

      "ConMed"  means  ConMed  Corporation,  a  New  York  corporation  having a
principal place of business at 523 French road, Utica, New York 13502.

      "ConMed  Agreement"  means that certain Distribution Agreement, dated July
15,  2003,  entered  into  by  and  between Biosearch and C.R. Bard, Inc., a New
Jersey corporation, and subsequently assigned to ConMed pursuant to that certain
Assignment  and Assumption Agreement in the form of a letter dated September 10,
2004, between C.R. Bard, Inc. and ConMed.

         "Disclosure Schedule" has the meaning set forth in Section 3 below.

      "Encumbrance"  shall  mean  any  mortgage,  pledge,  assessment,  security
interest,  deed  of  trust,  lease,  lien,  adverse claim, levy, charge or other
encumbrance of any kind, or any conditional sale or title retention agreement or
other agreement to give any of the foregoing in the future.

      "Excluded  Liabilities"  shall  have  the  meaning  set  forth  in Section
2(b)(ii) below.

      "Governmental  Authority" means any government, state, commonwealth or any
subdivision  thereof, whether domestic, foreign or multinational, or any agency,
authority,  bureau,  commission,  department  or similar body or instrumentality
thereof,  or any governmental court or tribunal, and any self-regulatory agency,
industry group or other governing body or authority.

         "Indemnified Party" has the meaning set forth in Section 8(c) below.

         "Indemnifying Party" has the meaning set forth in Section 8(c) below.

      "Intellectual  Property"  means  (a)  inventions  (whether  patentable  or
unpatentable, whether or not reduced to practice, and whether or not the subject
of  any  patent  applications)  and  any additions and improvements thereto; (b)
patents,  patent  rights,  patent  disclosures,  utility models, certificates of
invention,  statutory  invention  registrations, and applications for any of the
foregoing,  together with any reissuances, continuations, continuations in part,
revisions,  extensions,  divisions,  renewals,  or  reexaminations of any of the
foregoing  (each a "Patent"), (c) trademarks, service marks, trade dress, logos,
trade  names, Internet domain names and URLs, and corporate names, together with
any   translations,  adaptations,  derivations,  and  combinations  thereof  and

<PAGE>
including   all   goodwill   associated   therewith,   and   any   applications,
registrations,  and  renewals in connection therewith (each, a "Trademark"); (d)
works  of authorship in whatever form or medium, any copyrights therein (whether
registered  or  unregistered), and any applications, registrations, and renewals
relating  thereto  (each,  a  "Copyright");  (e)  trade secrets and Confidential
Information,  including  but  not  limited  to  ideas, research and development,
know-how,   formulas,   processes,  protocol,  compositions,  manufacturing  and
production  processes  and  techniques,  sterilization  processes and validation
information,   procedures,   devices,   technical   data,   designs,   drawings,
specifications,  customer  and supplier lists, pricing and cost information, and
business and marketing plans and proposals; (f) mask works;

(g)  any  other  proprietary  rights  in  information  and technology, including
without  limitation  any  pre-clinical  and  clinical  data and information; (h)
copies  and  tangible  embodiments  of  any of the foregoing in whatever form or
medium;  (i)  legal  and  equitable  remedies  for  past,  present,  and  future
infringements,  misappropriations,  misuses,  dilutions, and other violations of
any  of the foregoing; and (j) rights, title, and interests in and to any of the
foregoing  provided  by any treaty, statute, convention, common law, regulation,
or any other Law.

      "Inventory"  means the finished goods inventory, work-in-process inventory
and  raw  materials  (including without limitation, packaging, boxes and labels)
related  to  the Acquired Products set forth on Exhibit A, which Exhibit will be
updated  as of Closing and as of the Manufacturing Date (or such later date that
the Transition Condition is satisfied).

      "Laws"  means  all  federal,  state, municipal, foreign, and international
laws,   rules,   regulations,   codes,   statutes,   constitutions,  ordinances,
directives,  treaties, proclamations, conventions, and orders, and all judicial,
quasi-judicial  and  administrative and other official interpretations of any of
the foregoing.

      "License  Agreement"  shall  mean the license agreement attached hereto as
Exhibit F.

      "Licensed  Intellectual  Property" shall have the meaning set forth in the
License Agreement.

      "Liability"  means any liability, obligation, debt, demand, claim, expense
or commitment (whether known or unknown, whether asserted or unasserted, whether
absolute  or  contingent,  whether  accrued  or unaccrued, whether liquidated or
unliquidated, and whether due or to become due).

      "Manufacturing  Assets" means that certain equipment, machinery, fixtures,
molds,  tools,  dies  and  other  tangible assets used by Sellers to manufacture
Acquired Products set forth on Exhibit A.

      "Manufacturing Date" has the meaning set forth in Section 2(c)(ii) below.

      "Manufacturing  Equipment"  has  the meaning set forth in Section 7(e)(iv)
below.

      "Material  Adverse  Effect"  means,  with respect to Sellers, an effect or
effects  which,  individually  or in the aggregate, (i) is materially adverse to
the  business,  financial  condition,  assets,  or  operations  of  the Sellers'
business  related  to the sale of Acquired Products, (ii) materially affects the
Sellers'  ability to consummate the Transactions, or (iii) could reasonably have
an  adverse economic effect on the Acquired Assets of $50,000 or more, and, with
respect  to Buyer, an effect or effects which, individually or in the aggregate,
materially affects Buyer's ability to consummate the Transactions.

      "Ordinary  Course  of  Business"  means  the  ordinary  course of business
consistent  with  past  custom and practice (including with respect to quantity,
frequency and price).

      "Parties"  collectively refers to Sellers and Buyer, and "Party" refers to
Buyer or either of the Sellers individually, as applicable.

      "Person"  means an individual, a partnership, a limited liability company,
limited   partnership,  a  limited  liability  partnership,  a  corporation,  an
association,  a joint stock company, a trust, a joint venture, an unincorporated
organization,  or a governmental entity (or any department, agency, or political
subdivision thereof).

         "Purchase Price" has the meaning set forth in Section 2(c) below.


<PAGE>
      "Securities  Exchange  Act"  means the Securities Exchange Act of 1934, as
amended.

      "Sellers'  knowledge"  is  applicable  to  certain of those warranties and
representations  set  forth  in Section 3 of this Agreement or elsewhere in this
Agreement, which are subject to the qualification "to Sellers' knowledge" or "to
the  knowledge  of Sellers," or otherwise limited to matters "known" to Sellers.
Sellers will be deemed to have "knowledge" of a matter if the executive officers
of  the  Sellers  had  knowledge  of  such  matter  or  would have acquired such
knowledge  had  he  or  she inquired at or prior to that time as to such subject
matter  to  those of Sellers' employees that would be expected to have knowledge
of such subject matter in the course of performing their duties for the Sellers.

      "Specifications"  shall  mean  Sellers'  design,  packaging  and  labeling
specifications  and  quality  assurance  procedures  for  the Acquired Products,
current  as  of  the  Closing,  as  the same may from time to time thereafter be
modified  as  required  by  law  or as reasonably requested by Buyer or Sellers.
"Stent  Products"  means  the grafted biliary stent products listed on Exhibit A
hereto.

      "Third Party Claim" has the meaning set forth in Section 8(c)(i) below.

      "Transaction  Documents"  means  this  Agreement,  the  Bill  of Sale, the
Assignment  of  Contracts,  the  License  Agreement,  the  Sellers'  Non-Compete
Agreement  and  any  other  document, schedule, letter, certificate or agreement
attached  hereto  as  an  Exhibit  or delivered pursuant to this Agreement or in
connection with the transactions described herein.

      "Transactions" means the transactions provided for or contemplated by this
Agreement and the other Transaction Documents.

      "Transition   Condition"  means  the  date  upon  which  Buyer  reasonably
determines  that  (i)  Buyer  can successfully and independently manufacture and
produce  the  Acquired  Products  in  accordance with the standards set forth in
Section  7(e)(iv)  below,  and  (ii)  Sellers have satisfied its obligations set
forth in Section 7 and Section 9 herein.

      "Transition  Period"  means  the  period beginning on the Closing Date and
ending on the date the Transition Condition is satisfied.

         2. Basic Transactions.

            (a) Transactions. On and subject to the terms and conditions of this
Agreement:

                  (i)  Purchase  and  Sale  of  Acquired Assets. Buyer agrees to
purchase  from  Sellers, and Sellers agree to sell, transfer, convey, assign and
deliver  to  Buyer, title to and ownership of, all of the Acquired Assets at the
Closing other than the Regulatory Documentation, for the consideration specified
below in this Section 2. Title to the Acquired Assets, except for the Regulatory
Documentation,  shall  pass  to  Buyer  at  the Closing. Title to the Regulatory
Documentation  shall  pass  to Buyer at such time as the Transition Condition is
satisfied.  All  risk of loss related to the Acquired Assets shall pass to Buyer
upon  delivery  to  a  mutually agreed upon transportation agent for delivery to
Buyer,  or  if  such  assets  are  in  the hands of a third party where they are
intended  to remain, risk of loss shall pass upon transfer of title. The Parties
intend  for all of the Acquired Assets to be transferred to Buyer, whether owned
by  Sellers, Sellers' Affiliates or otherwise, and Sellers agree to cause all of
the Acquired Assets to be sold, transferred, conveyed, assigned and delivered to
Buyer in accordance with the terms of this Agreement.

                  (ii)  Supply  Agreement.  Sellers  agree  to  manufacture  the
Acquired  Products  for, and supply the Acquired Products to, Buyer according to
the terms in Section 9 and Exhibit H of this Agreement.

                  (iii) License Agreement. Sellers agree to license to Buyer the
Licensed  Intellectual Property pursuant to, and on the terms and conditions set
forth in, the License Agreement.

                 (b) Assumption/Exclusion of Liabilities.

                  (i)  Assumed  Liabilities. Subject to the conditions specified
in  this  Agreement,  on  the  Closing Date, Buyer will assume and agree to pay,
defend,  discharge  and  perform  as  and  when  due  only  the  liabilities and
obligations  under  the  Acquired  Contracts  ("Assumed  Liabilities"),  if any,
arising  or  accruing  only  after the Closing Date, but only to the extent that
Sellers'  rights and benefits under such Acquired Contracts are validly assigned

<PAGE>
to  Buyer  pursuant to this Agreement. Additionally, "Assumed Liabilities" shall
include the Liabilities that relate to the Regulatory Documentation.

                  (ii)  Excluded  Liabilities.  Notwithstanding  anything to the
contrary  contained  in  this Agreement, Buyer will not assume or be liable for,
and  will  have  no responsibility related to, any Liabilities of Sellers of any
kind or nature, other than the Assumed Liabilities.

                    (iii)  Responsibility  for Assumed Liabilities. Buyer agrees
to  assume  and  become  responsible  for  all of the Assumed Liabilities at the
Closing,  except  for  those  Assumed  Liabilities that relate to the Regulatory
Documentation.  Buyer  agrees  to  assume and become responsible for the Assumed
Liabilities related to the Regulatory Documentation upon the date that Buyer can
successfully  and independently manufacture and produce the Acquired Products in
accordance with the standards set forth in Section 7(e)(iv) below.

            (c)  Consideration Provided by Buyer for Acquired Assets. Subject to
the  terms  and conditions of this Agreement, including, without limitation, the
provisions  of  Section  2(d)  below,  as  total  consideration for the Acquired
Assets, Buyer shall pay Sellers an aggregate of One Million Six Hundred Thousand
Dollars ($1,600,000) (the "Purchase Price"), as follows:

                  (i)  Buyer  shall  deliver  to  Sellers,  at  the Closing, One
Million  Sixty-Six  Thousand  Six Hundred Sixty-Seven Dollars ($1,066,667.00) by
wire transfer in accordance with Sellers' wiring instructions; and

                  (ii)  Buyer  shall  pay  to  Sellers Five Hundred Thirty-Three
Thousand  Three Hundred Thirty-Three Dollars ($533,333.00) on the earlier of (A)
five  (5) days following the date that the Transition Condition has occurred, or
(B) June 30, 2009 (the "Manufacturing Date").

            (d)  ConMed  Distribution  Agreement  Conditions.  In the event that
Sellers  are  unable  to  obtain  the consent of ConMed to the assignment of the
ConMed Agreement to Buyer prior to Closing, then:

                  (i)  Sellers shall provide ConMed written notice of its intent
not to renew the ConMed Agreement pursuant to the terms thereof;

                  (ii)  Buyer shall be relieved of its obligation to comply with
the  covenant to provide the Acquired Products set forth in the last sentence in
Section 7(c) below solely with respect to Stent Products; and

                  (iii)  Buyer's  obligations  with  respect  to the payment and
delivery  of  the Purchase Price under Section 2(c) above shall be modified such
that  the  portion of the Purchase Price to be delivered at the Closing shall be
reduced  by Seventy Four Thousand Five Hundred Ninety Four Dollars ($74,594) and
the  portion  of  the Purchase Price to be delivered upon the Manufacturing Date
(or such later date as provided in Section 2(c)(ii) above) shall be increased by
Seventy Four Thousand Five Hundred Ninety Four Dollars ($74,594).

            (e)  Allocation  of  Purchase  Price.  The  Purchase  Price shall be
allocated  among  the  Acquired Assets as set forth on Exhibit C attached hereto
and  made  a  part  hereof.  Buyer  will  allocate  the Purchase Price among the
Acquired  Assets  in  a reasonable manner in accordance with Section 1060 of the
Internal Revenue Code and the regulations thereunder, based on the relative fair
market  values of the Acquired Assets, which Buyer shall complete and deliver to
Sellers  within  90  days  following  the  Closing.  In  the  event that Sellers
reasonably  disagree  with  the  proposed  allocation, the Parties will work and
negotiate  in good faith to resolve any disputes and finalize such allocation as
soon  as  possible  thereafter.  Buyer  and  Sellers  will file all of their tax
returns  consistent with the foregoing allocation and will not take any position
inconsistent  with  such  allocation  on  any  tax return or in any tax audit or
tax-related proceeding.

            (f)  The  Closing.  The  closing of the transactions contemplated by
this  Agreement  (the  "Closing")  shall take place at the offices of the Buyer,
commencing  at  10:00  a.m.  local time on the second business day following the
satisfaction  or  waiver  of all conditions to the obligations of the Parties to
consummate  the  Transactions (other than conditions with respect to actions the
respective Parties will take at the Closing itself) or such other date, time and
place  as  Buyer  and  Sellers  may mutually determine (the "Closing Date"). The
Parties  shall use commercially reasonable efforts to cause the Closing to occur
by February 27, 2009.

            (g)  Deliveries  at  the  Closing.  At the Closing, (i) Sellers will
deliver  to  Buyer  (or  cause  its  Affiliates to deliver to Buyer) the various
certificates, instruments, and documents referred to in Section 5(a) below; (ii)

<PAGE>
Buyer  will  deliver  to  Sellers  the  various  certificates,  instruments, and
documents  referred  to  in  Section 5(b) below; and (iii) Buyer will deliver to
Sellers the consideration specified in Section 2(c)(i) above.

      3.  Representations  and  Warranties  of  Sellers. Except as otherwise set
forth  in  the  disclosure  schedule  delivered  by Sellers to Buyer on the date
hereof (the "Disclosure Schedule"), each Seller jointly and severally represents
and warrants to Buyer on the date hereof and on the Closing Date (as though made
on the Closing Date and as though the Closing Date were substituted for the date
of this Agreement throughout this Section 3) as follows:

            (a) Organization of Seller. Sellers are corporations duly organized,
validly  existing  and  in  good  standing  under  the  laws  of  the respective
jurisdiction  of  their  incorporation. Each Seller has full corporate power and
authority  to  (i) carry on the business in which it is engaged, and (ii) to own
and use the properties owned and used by it.

            (b)  Authorization  of  Transaction.  Each Seller has full corporate
power  and  authority  to  execute  and  deliver  this Agreement and Transaction
Documents  to which it is a party and to perform their obligations hereunder and
thereunder.  The  execution,  delivery and performance of this Agreement and the
Transaction  Documents  by  each Seller and the consummation of the Transactions
have  been  duly and validly authorized by all necessary corporate action on the
part  of  each  Seller  and no other corporate proceedings on the part of either
Seller  are  necessary  to  authorize  this  Agreement or any of the Transaction
Documents or to consummate any of the Transactions. This Agreement and the other
Transaction   Documents  to  which  a  Seller  is  a  party,  assuming  the  due
authorization,  execution  and  delivery  hereof and thereof by Buyer hereto and
thereto, constitute the valid and legally binding obligations of such Seller, as
applicable,  enforceable  against such Seller in accordance with their terms and
conditions,  except  as  enforceability may be limited by applicable bankruptcy,
insolvency  or  similar  laws  affecting  or  relating  to  the  enforcement  of
creditors'   rights   generally   or   by   equitable   principles  relating  to
enforceability.

            (c)  Noncontravention.  Neither  the  execution and delivery of this
Agreement  nor  any  of  the  other Transaction Documents to which a Seller is a
party,  nor  the  consummation  of the Transactions, will (i) violate any Law or
other  restriction of any Governmental Authority to which a Seller is subject or
any  provision  of the charter or bylaws (or any other governance document) of a
Seller or (ii) conflict with, result in a breach of, constitute a default under,
result  in  the  acceleration  of,  create in any party the right to accelerate,
terminate,  modify,  or  cancel,  or  require  any  notice  under any agreement,
contract,  lease, license, instrument, or other arrangement to which a Seller is
a  party  or  by  which  it  is  bound or to which any of the Acquired Assets is
subject (or result in the imposition of any Encumbrance upon any of the Acquired
Assets), or (iv) require a Seller to obtain or make any waiver, consent, action,
approval  or  authorization  of,  or registration, declaration, notice or filing
with,  any  Governmental  Authority  or  private  non-governmental  third-party.
Section  3(c) of the Disclosure Schedule sets forth each consent required from a
third  party  in order for a Seller to consummate the Transactions (including to
sell  and assign the Acquired Assets to Buyer free and clear of any Encumbrance)
or  where  such consent is required by the terms of an Assumed Contract or other
Acquired Assets.

            (d)  Title  to Assets; Sufficiency of Assets. A Seller owns, and has
good  and marketable title to, all of the Acquired Assets, free and clear of any
Encumbrance  or  other restriction on transfer. The Acquired Assets are adequate
for  the  uses  to  which they are being put, have been maintained in accordance
with  normal  industry  practice  and are in good operating condition and repair
(ordinary  wear  and  tear  excepted). All of the Inventory being transferred to
Buyer  as  part of the Acquired Assets meets all specifications required of such
products  and has been properly sterilized and packaged. At the Closing, Sellers
will  convey  to  Buyer good and marketable title to all of the Acquired Assets,
free and clear of any Encumbrance or other restriction on transfer.

            (e)  No  Adverse  Change. Except as set forth on Section 3(e) of the
Disclosure  Schedule,  since  January  1,  2008, there has not been any Material
Adverse  Effect  on  the  business,  financial condition, operations, results of
operations,  or  future prospects of Sellers with respect to the business of the
Acquired  Products. Without limiting the generality of the foregoing, since that
date, with respect to the Acquired Products:

                    (i) No Seller has sold, leased, transferred, or assigned any
of the Acquired Assets, other than in the Ordinary Course of Business;



<PAGE>
                    (ii)  No Seller has granted any license or sublicense or any
rights under or with respect to any Acquired Intellectual Property;

                    (iii) No Seller has committed to any of the foregoing; and

                  (iv)  No  Seller  has  experienced any damage, destruction, or
loss (whether or not covered by insurance) to its tangible Acquired Assets.

            (f)  Legal  Compliance.  Each  Seller  and  each  of  its respective
predecessors  and  Affiliates  has  complied  with  all  applicable  Laws of any
Governmental  Authority  related  to  the Acquired Assets, except for violations
which,  in  the  aggregate,  could not reasonably be expected to have a Material
Adverse Effect. No Seller has received any written notice or other communication
from  any Governmental Authority regarding any actual or potential violation of,
or  failure  to  comply  with,  any  applicable Laws, as the same related to the
Acquired  Assets,  and  no  action,  suit,  proceeding,  hearing, investigation,
charge,  complaint, claim, demand, or notice has been filed or commenced against
a  Seller  or  any  of its predecessors or Affiliates alleging any failure to so
comply.

                 (g) Intellectual Property.

                    (i)  A  Seller  owns  or  has  the  right to use pursuant to
license,  sublicense,  agreement,  or  permission  (and  the details of any such
license,  sublicense or permission are set forth on the Disclosure Schedule) all
Acquired  Intellectual  Property.  A  Seller  has  taken all necessary action to
maintain  and protect its rights in each item of Acquired Intellectual Property,
and  the  confidentiality of each such item to the extent Seller owns such item,
or  to  the  extent  Seller  does  not  own such item, to the extent a Seller is
obligated  to  protect  such item's confidentiality or other rights a Seller may
have  in  such  Acquired  Intellectual Property, except where a failure to do so
would not have a Material Adverse Effect. No Seller is aware of any information,
materials,  facts or circumstances, including any information or fact that would
constitute  prior  art,  that  would render any Registered Intellectual Property
invalid or unenforceable.

                    (ii) No Seller has infringed upon, misappropriated, misused,
diluted  or  otherwise  violated  any Intellectual Property rights of any Person
with  respect  to  the  Acquired Products, none of the officers or directors (or
employees  with responsibility for Intellectual Property matters) of the Sellers
has  ever  received any charge, complaint, claim, demand, or notice alleging any
such  infringement, misappropriation, misuse, dilution or other violation of any
Person's  Intellectual Property (including, without limitation, any claim that a
Seller  must  license  or  refrain  from  using any Intellectual Property of any
Person).   The   Acquired   Intellectual   Property   does  not  infringe  upon,
misappropriate,  misuse,  dilute, or otherwise violate any Intellectual Property
rights  of  any  Person.  To  the  best  knowledge  of the Sellers, no Person is
infringing  upon,  misappropriating,  misusing, diluting, or otherwise violating
any Acquired Intellectual Property.

                    (iii)   Section   3(g)(iii)   of   the  Disclosure  Schedule
identifies each Patent, Copyright registration, Trademark registration and other
certificate  and  registration that has been issued to a Seller or any Affiliate
of  a Seller or any third party with respect to any of the Acquired Intellectual
Property,   identifies   each   pending  application  for  a  Patent,  Copyright
registration,  Trademark  registration,  and  other certificate and registration
that  a  Seller or any other Person has made with respect to any of the Acquired
Intellectual  Property,  and identifies each license, sublicense, agreement, and
other permission which a Seller has granted to any Person with respect to any of
the  Acquired Intellectual Property (together with any exceptions). Sellers have
delivered  to  Buyer  correct and complete copies of all such Patents, Copyright
registrations,   Trademark  registrations,  other  certificates,  registrations,
applications,  licenses, sublicenses, agreements, and permissions (as amended to
date)  and  has made available to Buyer correct and complete copies of all other
written  documentation  evidencing  ownership and prosecution (if applicable) of
each  such  item. With respect to each item of Intellectual Property required to
be identified in Section 3(g)(iii) of the Disclosure Schedule:

                        (A) A Seller possesses all right, title, and interest in
 and to the item, free and clear of any Encumbrance, license, other restriction,
 or  viable  claims  of  ownership  by  any  Person,  except  for such licenses,
 agreements,  and other permissions that a Seller has granted to any Person with
 respect  to  such item and that also are identified in Section 3(g)(iii) of the
 Disclosure Schedule;

                        (B)  the  item is not subject to any binding outstanding
injunction,  judgment,  order,  decree,  or  other  ruling  of  any Governmental
Authority of competent jurisdiction;
<PAGE>
                        (C)  the item was validly acquired under applicable Laws
 and remains valid, enforceable, and subsisting;

                        (D) no action, suit, proceeding, hearing, investigation,
 charge,  complaint,  claim,  or  demand  has  been  initiated  is pending or is
 threatened  that  challenges  the  legality,  validity, enforceability, use, or
 ownership of the item;

                        (E)  No Seller has any agreement to indemnify any Person
 for  or  against  any infringement, misappropriation, misuse, dilution or other
 violation  with  respect  to  the item, except for agreements entered into with
 suppliers or customers in the Ordinary Course of Business; and

                        (F)  No  Seller  has  committed any act or omission that
would  result  in  the  abandonment,  cancellation,  forfeiture, relinquishment,
invalidation  or  unenforceability  of the item and Sellers are not aware of any
information, facts or circumstances that would otherwise render the item invalid
or unenforceable.

                    (iv)  Section 3(g)(iv) of the Disclosure Schedule identifies
each  item  of  Acquired  Intellectual  Property that any Person owns and that a
Seller  uses  pursuant  to  license, sublicense, agreement, or permission (other
than  off-the-shelf  software  with  a  purchase  or  license price of less than
$5,000). Sellers have delivered to Buyer correct and complete copies of all such
licenses,  sublicenses,  agreements,  and permissions (as amended to date). With
respect to each item of Acquired Intellectual Property required to be identified
in Section 3(g)(iv) of the Disclosure Schedule:

                        (A)  the  license,  sublicense, agreement, or permission
covering  the  item is legal, valid, binding, enforceable, and in full force and
effect;

                        (B)   the  consummation  of  the  Transactions  and  the
Parties' performance as required under the Transaction Documents will not affect
the  respective  license's, sublicense's, agreement's, or permission's legality,
validity,  binding  nature,  enforceability,  or  existence,  and the same shall
remain in full force and effect on identical terms once assigned to Buyer;

                        (C)  no  party to the license, sublicense, agreement, or
permission  is  in breach or default, and no event has occurred that with notice
or  lapse  of  time  would constitute a breach or default or permit termination,
modification, or acceleration thereunder;

                        (D)  no  party to the license, sublicense, agreement, or
 permission  has  informed  any  other  party  thereto  that  it  repudiates any
 provision thereof;

                        (E) with respect to each sublicense, the representations
 and  warranties  set  forth  in  subsections (A) through (D) above are true and
 correct with respect to the underlying license;

                        (F)  the underlying item of Intellectual Property is not
 subject to any outstanding injunction, judgment, order, decree, or other ruling
 of any Governmental Authority of competent jurisdiction;

                        (G) no action, suit, proceeding, hearing, investigation,
charge,  complaint,  claim,  or  demand  has  been  initiated, is pending, or is
threatened  that  challenges  the  legality,  validity,  enforceability,  use or
ownership of the underlying item of Acquired Intellectual Property;

                        (H)  No Seller has not granted any sublicense or similar
right with respect to such license, sublicense, agreement, or permission; and

                            (I) No Seller is aware of any information, facts, or
circumstances  that  would  enable  the underlying item of Intellectual Property
invalid or unenforceable.

                    (v) Except as set forth on Section 3(g)(v) of the Disclosure
Schedule,  all  of  the  employees  of  the  Sellers have entered into invention
assignment  and  confidentiality  agreements  under  which  such  employees have
assigned  to  a  Seller  all  of  their  right,  title  and  interest  in and to
Intellectual  Property  related to the Acquired Intellectual Property and agreed
not  to  use  or  disclose,  other  than  for  the  benefit  of Sellers or their
successors  or assigns, any Confidential Information of Sellers that is included
in the Acquired Intellectual Property. Except as set forth on Section 3(g)(v) of
the  Disclosure Schedule, all independent contractors and consultants of Sellers
who  participated  in  the conception, creation, reduction to practice, or other

<PAGE>
development  of  any  Acquired  Intellectual Property has entered into invention
assignment  and  confidentiality  agreements  under  which  such contractors and
consultants  have  assigned to Sellers all of their right, title and interest in
and  to  Intellectual Property related to the Acquired Intellectual Property and
have  agreed  not  to  use or disclose, other than for the benefit of Sellers or
their  successors  or  assigns,  any Confidential Information of Sellers that is
included  in  the  Acquired Intellectual Property. No such employee, independent
contractor  or  consultant  has  breached  any  of  the  provisions  of any such
agreement.

                    (vi)  Sellers  have undertaken their best efforts to enforce
their  rights in all Acquired Intellectual Property or any Intellectual Property
related thereto.

                  (vii)  Except  as  set  forth  on  Section  3(g)(vii)  of  the
Disclosure Schedule, no filing, response, or payment must be made, within ninety
(90)  days  after  the Closing Date, for Sellers to perfect, prosecute, protect,
maintain,  or  renew  its  rights  in  or  to  any item of Acquired Intellectual
Property.

            (h)  Environmental,  Health, and Safety Matters. Each Seller and its
respective   predecessors  and  Affiliates  has  complied  with  all  applicable
environmental, health, and safety Laws the failure of which to comply with would
have  an  adverse  effect  on  the  Acquired  Assets  or  which could create any
Encumbrance  on  the  Acquired  Assets.  Without  limiting the generality of the
foregoing,  each  Seller  and  its  respective  predecessors  and Affiliates has
obtained  and  complied  with  all  permits,  certificates,  licenses,  filings,
approvals  and  other  authorizations  of  any  Governmental  Authority that are
required  pursuant  to any applicable environmental, health, and safety Laws for
the operation of the Acquired Products business of Sellers.

                 (i) Contracts.

                  (i)   Section  3(i)  of  the  Disclosure  Schedule  lists  the
following contracts and other agreements related to the Acquired Assets to which
a  Seller  is  a  party  and  which  are  being assigned to Buyer as part of the
Transactions  or  which  would  restrict,  affect or impair, in any way, Buyer's
ability  to  manufacture,  produce,  distribute  or  sell  the Acquired Products
following the Closing:

                        (A)  any  agreement (or group of related agreements) for
the lease of personal property to or from any Person that involves consideration
in excess of $5,000;

                        (B)  any  agreement (or group of related agreements) for
the purchase or sale of raw materials, commodities, supplies, products, or other
personal property, or for the furnishing or receipt of services, the performance
of  which  will  extend  over  a  period  of  more  than  one  year  or  involve
consideration in excess of $5,000;

                        (C)  any  agreement  concerning  a  partnership or joint
venture;

                        (D) any agreement concerning confidentiality or imposing
 any  material  restriction  on  the right of a Seller to compete with any other
 Person which affects the Acquired Products;

                        (E)  any  agreement  between a Seller and its Affiliates
 related to the Acquired Products;

                        (F)  any supply or vendor agreement under which a Seller
receives  any  services, goods, or other items the performance of which involves
consideration in excess of $5,000 related to the Acquired Products;

                        (G)  any  agreement  under  which  the consequences of a
default  or  termination  could  have  a  Material Adverse Effect related to the
Acquired Products; and

                        (H)  any  agreement  affecting the Acquired Intellectual
Property.

                  (ii)  Sellers  have  delivered to Buyer a correct and complete
copy of each written agreement listed in Section 3(i) of the Disclosure Schedule
(as  amended to date). With respect to each such agreement: (A) the agreement is
legal,  valid,  binding,  enforceable,  and  in  full  force and effect; (B) the
agreement  will  continue  to be legal, valid, binding, enforceable, and in full
force  and effect on identical terms (other than the assignment of such Seller's

<PAGE>
rights  and  obligations  to  the  Buyer)  following  the  consummation  of  the
Transactions;  and  (C) neither of the Sellers nor the other party or parties to
the  agreement are in breach or default, no event has occurred which with notice
or  lapse  of  time would constitute a breach or default, or permit termination,
modification, or acceleration, under the agreement and no Seller has the present
expectation  or intention of not fully performing all its respective obligations
under  each  such  agreement  prior to Closing. Where consent is required to the
assignment  of  such  contract to Buyer, the applicable Seller has obtained such
consent  in  writing  and  will deliver a copy of such consent to Buyer prior to
Closing as further provided in Section 5(a)(iv) herein. No agreement or contract
that  is  material  to  the  Acquired  Assets  is  not  included in the Acquired
Contracts.

            (j) Litigation. Except as otherwise set forth on Section 3(j) of the
Disclosure  Schedule,  there  is  no  litigation  or  governmental proceeding or
investigation  pending  or,  to  Sellers'  knowledge,  threatened against either
Seller  affecting  any of the Acquired Assets, nor to the Sellers' knowledge has
there occurred any event or does there exist any condition on the basis of which
any  such  litigation,  proceeding or investigation might properly be instituted
against  a  Seller  related to the Acquired Assets. No Seller is in default with
respect to any order, writ, injunction, decree, ruling or decision of any court,
commission,  board  or  other  Governmental  Authority  related  to the Acquired
Assets.  There  are  no  actions,  suits,  claims, investigations or proceedings
pending  or,  to Sellers' knowledge, threatened, against a Seller related to the
Acquired  Assets that would reasonably be expected to result, either in any case
or  in the aggregate, in a Material Adverse Effect or affect the rights of Buyer
in  the Acquired Assets or the ability of Buyer to manufacture, distribute, sell
or  otherwise dispose of the Acquired Products. The foregoing sentences include,
without  limiting  their  generality, actions pending or, to Sellers' knowledge,
threatened  against either Seller involving the employment (prior or present) of
any  of  Sellers'  officers'  or employees' use of any information or techniques
related  to  the  Acquired  Assets  allegedly  proprietary  to  such  officer or
employee.

            (k)  Product  Warranty.  Except  as set forth on Section 3(k) of the
Disclosure  Schedule,  the  Acquired  Products  have been manufactured, sold and
delivered  by Sellers in conformity with all applicable Laws of all Governmental
Authorities,  contractual  commitments and all warranties to which such products
are  subject. No Acquired Product manufactured, sold or delivered by Sellers are
subject  to any guaranty, warranty, or other indemnity beyond the standard terms
and  conditions  of  sale of Sellers applicable to such product. Section 3(k) of
the  Disclosure  Schedule  includes  copies  of  the Sellers' standard terms and
conditions of sale for all Acquired Products.

            (l)  Product  Liability.  Sellers do not have any Liability (and, to
Sellers' knowledge, there is no basis for any action, suit, proceeding, hearing,
investigation,  charge,  complaint,  claim,  or demand against any Seller or its
respective Affiliates giving rise to any Liability) arising out of any injury to
individuals  as  a  result  of  such  individuals'  use  of any Acquired Product
manufactured, sold or delivered by either Seller.

                 (m) Customers and Suppliers.
                  (i)  During  the  twelve  (12) month period ending on the date
hereof, there has not been any material interruption in the provision by Sellers
of Acquired Products to customers.

                  (ii)  Section  3(m)(ii)  of the Disclosure Schedule contains a
list of all suppliers and vendors of the Acquired Products to which Sellers paid
or were obligated to pay in excess of $5,000 during the 12-month period prior to
the  date  hereof,  together  with  complete  contact information, list of items
supplied  and  the  amount of expense incurred to such vendor or supplier during
that period.

                   (iii) Section 3(m)(iii) of the Disclosure Schedule contains a
listing  of  all  joint  marketers,  distributors, resellers and any other third
parties  who  sell Acquired Products for Sellers, together with complete contact
information  for  each  such  Person,  a  description  of  the  relationship and
compensation paid to each such Person for such services.

                  (iv)  Section  3(m)(iv)  of the Disclosure Schedule contains a
list  of  all  customers  who have purchased any of the Acquired Products in the
last 24 months and their complete order history and contact information.

                 (n) Pre-Closing Representations.

                  (i)  Operation of Acquired Products Business. Since January 1,
2008,  no  Seller has engaged in any practice, taken any action, or entered into

<PAGE>
any  transaction  outside  the  Ordinary  Course of Business with respect to the
manufacture,  distribution  or  sale  of the Acquired Products. Since January 1,
2008,  the  Inventory  has  been  sold  only  at  normal prices and only to fill
existing orders or orders solicited in the Ordinary Course of Business.

                  (ii) Preservation of Acquired Products Business. Since January
1,  2008, Sellers have used commercially reasonable efforts to keep the business
and   properties   substantially   intact   with  respect  to  the  manufacture,
distribution  and sale of Acquired Products, including its present relationships
with licensors, licensees, vendors, manufacturers, suppliers and customers.

            (o)  Broker  Fees.  No Seller has any Liability or obligation to pay
any  fees  or commissions to any broker, finder, agent or investment banker with
respect to the Transactions.

      4.  REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer represents and warrants
to Sellers as follows:

            (a)  Organization  of  Buyer. Buyer is a corporation duly organized,
validly existing, and in good standing under the laws of the State of Utah.

            (b) Authorization of Transaction. Buyer has full corporate power and
authority  to  execute  and  deliver  this  Agreement  and the other Transaction
Documents  to  which  it is a party and to perform its obligations hereunder and
thereunder. This Agreement and the other Transaction Documents to which Buyer is
a  party,  assuming  the  due  authorization,  execution and delivery hereof and
thereof  by  Sellers  and  any  other parties hereto and thereto, constitute the
valid  and  legally  binding  obligation  of Buyer, enforceable against Buyer in
accordance  with  their  terms  and  conditions, except as enforceability may be
limited  by  applicable  bankruptcy,  insolvency  or  similar  laws affecting or
relating  to  the  enforcement  of  creditors'  rights generally or by equitable
principles relating to enforceability.

            (c) Noncontravention. Neither the execution and the delivery of this
Agreement  or the other Transaction Documents to which Buyer is a party, nor the
consummation  of  the  transactions  contemplated  hereby  and thereby, will (i)
violate  any  Law  or  other  restriction of any Governmental Authority to which
Buyer  is  subject  or  any  provision  of  its  charter or bylaws (or any other
governance  document) or (ii) conflict with, result in a breach of, constitute a
default  under,  result in the acceleration of, create in any party the right to
accelerate,  terminate,  modify,  or  cancel,  or  require  any notice under any
agreement,  contract,  lease, license, instrument, or other arrangement to which
Buyer  is  a  party  or  by  which  it is bound or to which any of its assets is
subject.

            (d)  Brokers'  Fees. Buyer has no Liability or obligation to pay any
fees  or  commissions  to  any  broker,  finder, agent or investment banker with
respect to the Transactions.

            (e)  Financial Status. Buyer has the financial resources and ability
to  satisfy  its financial obligations under this Agreement and to discharge all
Assumed  Liabilities  in  accordance  with  Buyer's  obligations  in  connection
therewith.

         5. CONDITIONS TO CLOSING.

            (a)  Conditions  to  Obligation  of  Buyer.  Buyer's  obligation  to
consummate  the  Transactions  in  connection  with  the  Closing  is subject to
satisfaction of the following conditions:

                    (i)  the representations and warranties set forth in Section
3  above  shall  be  true  and correct in all material respects at and as of the
Closing  Date, except to the extent that such representations and warranties are
qualified  by  the  term  "material"  or contain terms such as "Material Adverse
Effect,  "  in  which  case  such representations and warranties (as so written,
including the term "material" or "Material Adverse Effect," as applicable) shall
be true and correct in all respects at and as of the Closing Date;

                    (ii)  Sellers  shall  have  performed  and  complied  in all
material respects with all of their covenants hereunder that are to be performed
prior  to Closing, except to the extent that such covenants are qualified by the
term  "material,"  or  contain terms such as "Material Adverse Effect," in which
case Sellers shall have performed and complied with all of such covenants (as so
written,  including  the  term  "material"  or  "Material  Adverse  Effect,"  as
applicable) in all respects through the Closing;

                    (iii) Since the date of this Agreement, there shall not have

<PAGE>
occurred  any  Material  Adverse Effect with respect to the Acquired Assets that
shall not have been cured prior to the Closing Date;

                    (iv)    Sellers    shall    have   received   any   required
authorizations,  consents, and approvals referred to in Section 3(c) and Section
3(i)(ii)  above,  and  Sellers,  at  the Closing, will use best faith efforts to
deliver a copy of all such required consents to Buyer;

                    (v)  Sellers  may deliver to Buyer a certificate executed by
their  respective Presidents or Chief Executive Officers to the effect that each
of  the  conditions  specified above in Section 5(a)(i)-(iv) is satisfied in all
respects;

                    (vi)  no  action,  suit,  or  proceeding shall be pending or
threatened  before  any court or Governmental Authority or before any arbitrator
wherein  an  unfavorable  injunction, judgment, order, decree, ruling, or charge
would  (A) prevent consummation of any of the Transactions, (B) cause any of the
Transactions  to  be  rescinded  following  their  consummation,  or  (C) affect
adversely the right of Buyer to own the Acquired Assets (and no such injunction,
judgment,  order,  decree,  ruling,  or  charge  shall  be  in  effect),  and no
Governmental  Authority  shall  have  enacted,  issued, promulgated, enforced or
entered  any  injunction,  order,  decree,  ruling  or  other legal restraint or
prohibition  (whether  temporary,  preliminary  or  permanent)  which is then in
effect  and has the effect of making consummation of the Transactions illegal or
prohibiting consummation of the Transactions;

                    (vii)  all  regulatory  approvals  and  licenses required to
consummate  the  Transactions  shall have been obtained and shall remain in full
force and effect and any statutory waiting periods in respect thereof shall have
expired or been terminated;

                    (viii)  there  shall have been no amendments, supplements or
updates  to  the  Disclosure  Schedule,  the  aggregate  effects  of which could
reasonably be expected to result in a Material Adverse Effect;

                    (ix)  Sellers,  and  the  other  parties thereto, other than
Buyer, shall have executed and delivered at Closing, the

                        (A)  the  Bill of Sale attached hereto as Exhibit D (the
"Bill of Sale"),

                        (B)  the Assignment and Assumption of Acquired Contracts
attached hereto as Exhibit E (the "Assignment of Contracts"),

                        (C)  the  License Agreement attached hereto as Exhibit F
(the "License Agreement"),

                        (D)  the  Non-Compete  Agreement  with  Seller  attached
hereto as Exhibit G (the "Seller Non-Compete Agreement"); and

                        (E)  all  other  documents and instruments of assignment
necessary to transfer all Acquired Assets to Buyer; and

                    (x)  All  actions  to be taken by Sellers in connection with
consummation  of  the  Transactions and all certificates, opinions, instruments,
and  other  documents  required  to  effect  the Transactions will be reasonably
satisfactory in form and substance to Buyer.

Buyer  may  waive  any condition specified in this Section 5(a) if it executes a
writing so stating at or prior to the Closing.

            (b)  Conditions  to Obligation of Sellers. The obligation of Sellers
to  consummate  the  Transactions  in  connection with the Closing is subject to
satisfaction of the following conditions:

                    (i)  the representations and warranties set forth in Section
4  above  shall  be  true  and correct in all material respects at and as of the
Closing  Date, except to the extent that such representations and warranties are
qualified  by  the  term  "material"  or contain terms such as "Material Adverse
Effect,"  in  which  case  such  representations  and warranties (as so written,
including the term "material" or "Material Adverse Effect," as applicable) shall
be true and correct in all respects at and as of the Closing Date;

                    (ii) Buyer shall have performed and complied in all material
respects  with  all of its covenants hereunder that are to be performed prior to
Closing,  except  to  the  extent  that such covenants are qualified by the term
"material,"  or  contain  terms such as "Material Adverse Effect," in which case

<PAGE>
Sellers  shall  have  performed  and  complied with all of such covenants (as so
written,  including  the  term  "material"  or "Material Adverse Effect") in all
respects through the Closing;

                    (iii)  no  action,  suit,  or proceeding shall be pending or
threatened  before  any court or Governmental Authority or before any arbitrator
wherein  an  unfavorable  injunction, judgment, order, decree, ruling, or charge
would  (A) prevent consummation of any of the Transactions, (B) cause any of the
Transactions  to  be  rescinded  following  their  consummation,  or  (C) affect
adversely the right of Buyer to own the Acquired Assets (and no such injunction,
judgment,  order,  decree,  ruling,  or  charge  shall  be  in  effect),  and no
Governmental  Authority  shall  have  enacted,  issued, promulgated, enforced or
entered  any  injunction,  order,  decree,  ruling  or  other legal restraint or
prohibition  (whether  temporary,  preliminary  or  permanent)  which is then in
effect  and has the effect of making consummation of the Transactions illegal or
prohibiting consummation of the Transactions;

                    (iv) Buyer may have executed and delivered the Assignment of
Contracts; and

                    (v)  all actions to be taken by Buyer in connection with the
consummation   of   the   Transactions  and  all  certificates,  instruments  of
assumption,  opinions,  instruments  and  other documents required to effect the
Transactions will be reasonably satisfactory in form and substance to Sellers.

      6. PRE-CLOSING COVENANTS. Prior to the Closing Date or termination of this
Agreement pursuant to Section 10:

            (a)   General.  Each  of  the  Parties  will  use  all  commercially
reasonable efforts to take all actions and to do all things necessary, proper or
advisable  in order to consummate and make effective the Transactions (including
the  satisfaction,  but  not  waiver,  of the conditions to Closing set forth in
Section  5  above). These efforts shall include the Parties cooperating with one
another  to  obtain  any  necessary  consents or authorizations from any private
party or Governmental Authority necessary in connection with the transfer of the
Acquired Assets from Sellers to Buyer

            (b)  Notices  and  Consents.  Sellers  may give any notices to third
parties,  and  shall obtain any third party consents referred to in Section 3(c)
above

            (c)  Operation of Business. Sellers will not engage in any practice,
take  any  action  or  enter into any transaction outside the Ordinary Course of
Business with respect to the Acquired Assets without the consent of Buyer, which
shall  not  be  unreasonably  withheld.  Sellers shall use reasonable commercial
efforts  to  (A)  preserve  intact the business organization with respect to the
Acquired  Products  in  all material respects, (B) preserve the current business
relationships  of  Sellers  with  customers,  vendors,  distributors, suppliers,
licensors,  licensees,  contractors and other Persons to the extent Sellers have
material  business  relations with any of such enumerated parties related to the
Acquired Products, (C) maintain the Acquired Assets in good repair and condition
in  all  respects (ordinary wear and tear excepted) other than those disposed of
in the Ordinary Course of Business, (D) maintain all insurance policies in force
as  of  the  date of this Agreement and necessary to the conduct of the Acquired
Products  business as currently conducted, (E) maintain the books of account and
records  related  to  the  Acquired  Assets  in  the usual, regular and ordinary
manner,  and  (F)  maintain,  enforce  and protect all of Sellers' rights in the
Acquired  Intellectual Property in a manner consistent in all respects with past
custom  and  practice.  By  way  of  amplification and not limitation, except as
expressly  contemplated  by  this Agreement or any of the Transaction Documents,
and  except  as  otherwise required in order to effect the Transactions, Sellers
shall  not,  between  the  date  of  this Agreement and the Closing, directly or
indirectly  do, or propose to do, any of the following without the prior written
consent  of  Buyer:  (H)  sell,  dispose  of  or  cause  an Encumbrance upon, or
authorize  the  sale,  disposition  or  Encumbrance  upon, of any portion of the
Acquired  Assets  except  in the Ordinary Course of Business, (I) enter into any
agreement  that is reasonably likely to be materially adverse to the business of
Sellers  as  related  to  the Acquired Products business, (J) license, assign or
otherwise  transfer  to  any  Person  any  rights  to  any Acquired Intellectual
Property   or  fail  to  maintain,  enforce,  defend  or  protect  any  Acquired
Intellectual  Property,  (K)  settle any action, claim, dispute or suit with any
third  party  or  Governmental  Authority  relating  to the Acquired Assets, the
Transaction  Documents or the Transactions, (L) take, commit to take, or fail to
take any action that would (1) make any representation or warranty of Sellers in
this  Agreement  inaccurate  in any material respect at, or as of any time prior
to,  the  Closing  (except  for those representations or warranties that address
matters  only as of a particular date or only with respect to a specified period

<PAGE>
of time, which need only be true and correct in all material respects as of such
date  or  with  respect  to  such  period of time), or (2) impair the ability of
Sellers  or  Buyer  to  consummate the Transactions in accordance with the terms
hereof  or delay such consummation, or (M) authorize or agree to take and of the
foregoing actions prohibited under this Section 6(c).

            (d)  Full  Access.  Sellers  shall  permit  representatives of Buyer
(including  legal counsel and accountants) to have full access at all reasonable
times,  and  in  a  manner  so  as  not  to  interfere  with the normal business
operations  of  Sellers,  to all premises, assets, properties, personnel, books,
records, agreements and documents of or pertaining to the Acquired Assets.

            (e)  Notice  of  Developments.  Each Party shall give prompt written
notice  to  the other Party of any development that would reasonably be expected
to result in a Material Adverse Effect on such Party.

            (f)  No Participation or Solicitation of Competing Transaction. From
the  date of this Agreement until the Closing or, if earlier, the termination of
this  Agreement  in  accordance  with  its  terms,  Sellers (whether directly or
indirectly  through  advisors,  agents or other intermediaries) will cause their
respective    Affiliates,    officers,    directors,   advisors,   shareholders,
representatives  and  other personnel and agents not to, directly or indirectly,
(i)  solicit,  initiate  or  knowingly  encourage,  or  take any other action to
facilitate, any inquiries or the making of any proposal that constitutes, or may
reasonably be expected to lead to, any Acquisition Proposal, (ii) participate or
engage  in  discussions  or  negotiations  with,  or  disclose  or  provide  any
non-public  information  relating to the Acquired Assets or afford access to the
properties,  books  or records of Sellers related to the Acquired Assets to, any
Person  that  has  made  an  Acquisition  Proposal  or  with  or  to  any Person
contemplating  making an Acquisition Proposal, or (iii) enter into any agreement
or  arrangement  providing  for  or relating to an Acquisition Proposal. Sellers
shall  immediately  cease  and  cause  to  be  terminated  and shall cause their
respective  Affiliates  and  their  respective  officers,  directors, employees,
shareholders,  managers,  representatives  and  other  personnel  and agents, to
terminate  all  existing  discussions  and  negotiations  that  any such persons
conducted  heretofore  with  respect to, or that could reasonably be expected to
lead to, an Acquisition Proposal.

            (g)  Completion  of Non-assignable Agreements. Sellers shall use all
commercially  reasonable  efforts  to  obtain any consent, approval or amendment
required  to  negotiate  and/or assign any contract or agreement included in the
Acquired Assets, including without limitation the ConMed Agreement, or any other
Acquired  Asset  to  be  Assigned  to  Buyer  hereunder, and Buyer shall use its
commercially  reasonable  efforts  to  fulfill  Sellers'  obligations under such
contracts. Sellers shall keep Buyer reasonably informed from time to time of the
status  of  the foregoing and Buyer shall cooperate with Sellers in this regard.
To  the  extent  that  the  rights  of  Sellers  under any contract or agreement
included  in  the  Acquired  Assets,  or  under  any  other Acquired Asset to be
assigned  to Buyer hereunder, may not be assigned without the consent of another
Person  which  has  not been obtained prior to Closing, this Agreement shall not
constitute  an  agreement to assign the same if an attempted assignment would be
unlawful  or  would  result in a breach of contract. If any such consent has not
been  obtained  or  if  any  attempted  assignment would be ineffective or would
impair  Buyer's  rights under the instrument in question so that Buyer would not
acquire  the  benefit  of  all  such rights, then Sellers, to the maximum extent
permitted  by  Law  and the instrument, and subject to the provisions of Section
2(d)  above  with respect to the ConMed Agreement, shall act as Buyer's agent in
order  to  obtain  for  Buyer  the  benefits  thereunder  and  the Parties shall
cooperate,  to the maximum extent permitted by Law and the instrument, with each
other  in  any other reasonable arrangement designed to provide such benefits to
Buyer.

      7.  POST-CLOSING  COVENANTS.  The Parties agree as follows with respect to
the period following the Closing.

            (a)  General.  In  case within seven (7) years after the Closing any
further  action  is  necessary  or  desirable  to  carry out the purposes of the
Agreement,  each  of  the  Parties  will take such further action (including the
execution  and  delivery of such further instruments and documents) as the other
Party reasonably may request, all at the sole cost and expense of the requesting
Party (unless the requesting Party is entitled to indemnification therefor under
Section 8 below).

            (b)  Litigation  Support. Subject to the indemnification obligations
under  this  Agreement,  in  the  event and for so long as any Party actively is
contesting   or   defending  against  any  action,  suit,  proceeding,  hearing,
investigation, charge, complaint, claim, or demand in connection with (i) any of

<PAGE>
the  Transactions  or (ii) any fact, situation, circumstance, status, condition,
activity,  practice,  plan, occurrence, event, incident, action, failure to act,
or transaction on or prior to the Closing involving any of Buyer or Sellers, the
other Party will reasonably cooperate with the contesting or defending Party and
its  counsel  in  the  contest  or  defense, make available its personnel during
normal  business  hours,  and provide such testimony and access to its books and
records  during  normal  business  hours  as  shall  be  reasonably necessary in
connection  with the contest or defense, all at the sole cost and expense of the
contesting or defending Party.

            (c)  Customers  and  Vendors. Sellers will not, and will cause their
respective  Affiliates  to  not, take any action, or instruct any third party to
take any action, that is designed or intended to have the effect of discouraging
any  licensor,  customer,  distributor,  vendor,  supplier,  or  other  business
associate of Sellers from maintaining the same business relationships with Buyer
after  the  Closing  as  such  licensor,  customer,  vendor,  supplier, or other
business  associate  of  Sellers  maintained  with Sellers prior to the Closing.
Buyer  hereby  agrees  that,  for  a  period  beginning  on the Closing Date and
continuing  for twelve (12) months thereafter (and providing that the applicable
distributors  of  the Acquired Products shall have agreed), it shall not decline
to  fulfill  any  order  for  Acquired  Products  from any customer set forth on
Section  3(m)(iv)  of the Disclosure Schedule, provided that all such orders are
materially  similar  in  size and/or scope to such customer's orders placed with
Sellers prior to the Closing Date.

                 (d) Confidentiality.

(i) Sellers shall cause their respective Affiliates,
   directors,

officers, agents and employees to treat and hold as such all of the Confidential
Information  in  its  possession  and  which  relates  to  the  Acquired  Assets
(hereinafter  defined  as "Acquired Products Confidential Information"), refrain
from  using  any  of  the  Acquired  Products Confidential Information except in
connection  with  this  Agreement, and deliver promptly to Buyer, at the request
and  option of Buyer, all embodiments and copies (in whatever form or medium) of
the  Acquired  Products  Confidential  Information  which are in his, her or its
possession,  subject  to  Sellers  having  the  right  to  retain a copy of such
information for record purposes only and so as to satisfy any obligations it has
in  relation  to  any  regulatory  or  tax  authorities having jurisdiction over
Sellers.  In  the event that Sellers are requested or required (by oral question
or  request for information or documents in any legal proceeding, interrogatory,
subpoena,  civil  investigative  demand,  or  similar  process)  to disclose any
Acquired  Products  Confidential Information, Sellers will notify Buyer promptly
of  the  request or requirement so that Buyer may seek an appropriate protective
order  or  waive  compliance with the provisions of this Section 7(d)(i). If, in
the  absence of a protective order or the receipt of a waiver hereunder, Sellers
are,  on  the  advice  of  counsel,  compelled to disclose any Acquired Products
Confidential  Information  to  any  tribunal,  Sellers may disclose the Acquired
Products  Confidential  Information  to  the  tribunal;  provided, however, that
Sellers  shall  use  their  reasonable  commercial  efforts  to  obtain,  at the
reasonable  request  of  Buyer,  an  order  or other assurance that confidential
treatment will be accorded to such portion of the Acquired Products Confidential
Information required to be disclosed as Buyer shall designate.

                  (ii)  Other than in relation to Acquired Products Confidential
Information, Buyer shall cause its Affiliates, officers, directors and employees
to  treat  and  hold  as  such  all  of the Confidential Information of Sellers,
refrain  from using any of the Confidential Information of Sellers except in the
manner  and  for  the  purpose that is expressly stated in this Agreement and in
connection  with  the  operation  of  the  business  of the Acquired Assets, and
deliver  promptly  to  Sellers or destroy, at the request and option of Sellers,
all  embodiments  and  copies  (in  whatever form or medium) of the Confidential
Information  of Sellers which are in his, her or its possession. If Closing does
not  occur,  Buyer shall cause its Affiliates, officers, directors and employees
to  treat and hold as such all of the Acquired Products Confidential Information
of  Sellers,  refrain  from  using  any  of  the  Acquired Products Confidential
Information  of  Sellers  except  in connection with this Agreement, and deliver
promptly  to  Sellers  or  destroy,  at  the  request and option of Sellers, all
embodiments  and  copies  (in  whatever form or medium) of the Acquired Products
Confidential  Information of Sellers which are in his, her or its possession. In
the  event  that  any  such Person is requested or required (by oral question or
request  for  information  or  documents in any legal proceeding, interrogatory,
subpoena,  civil  investigative  demand,  or  similar  process)  to disclose any
Confidential  Information  (including Acquired Products Confidential Information
in  the  event  that Closing does not occur) of Sellers, that Person will notify
Sellers  promptly  of the request or requirement so that the Sellers may seek an

<PAGE>
appropriate  protective  order  or  waive compliance with the provisions of this
Section  7(d)(ii).  If, in the absence of a protective order or the receipt of a
waiver  hereunder,  any  such  Person is, on the advice of counsel, compelled to
disclose  any  Confidential  Information of Sellers to any tribunal, that Person
may  disclose the Confidential Information of Sellers to the tribunal; provided,
however, that the disclosing Person shall use his or its reasonable best efforts
to  obtain,  at  the  reasonable request of Sellers, an order or other assurance
that confidential treatment will be accorded to such portion of the Confidential
Information required to be disclosed as Sellers shall designate.

            (e)  Transfer  of  Assets.  The  Parties agree to the following with
respect to the delivery to Buyer of the Acquired Assets:

                  (i)  Inventory.  At  such  time  as Buyer and Sellers mutually
agree  (but  in  any  event  on or prior to the date the Transition Condition is
satisfied),  Sellers  will  transfer  to  Buyer all Inventory. All new Inventory
created  during  the  Transition  Period  shall  be  manufactured,  packaged and
supplied  by Sellers under the terms and conditions of the supply provisions set
forth  in  Section 9. From and after the Closing, Sellers shall not, directly or
indirectly,  transfer  any  Inventory  in  any  manner outside of sales to Buyer
pursuant  to  the  supply  provision  terms  and conditions further set forth in
Section 9 hereof. Sellers shall promptly notify Buyer of all orders for Acquired
Products  received  from  and  after  the  Closing,  and  forward  to  Buyer all
information  related  thereto,  and all such orders received by Sellers shall be
for the account of Buyer.

                  (ii)  Training. During the period beginning on the Closing and
ending  on  the  date  the  Transition  Condition  is satisfied (the "Transition
Period"),  at  the  request  of  Buyer,  Sellers agree to use their commercially
reasonable  efforts  to  train  Buyer's  personnel  on manufacturing, producing,
packaging,  validating and sterilizing the Acquired Products. Sellers shall make
their  personnel  that  are  experienced  and  knowledgeable  about the Acquired
Products  available  to  Buyer  for the duration of the Transition Period during
normal  business  hours upon five (5) days advanced written request. Buyer shall
be  responsible  for  its own costs and expenses incurred for such training, and
the  reasonable  travel costs and expenses incurred by any of Sellers' personnel
pursuant to this paragraph, provided such travel costs and expenses are approved
in  advance  by  Buyer. Sellers shall bear their own costs and expenses incurred
for training (other than such travel expenses as are approved in accordance with
this paragraph).

                       (iii)  Transfer  of  Acquired Assets. Except as otherwise
provided  in this Section 7(e), immediately following Closing, Buyer and Sellers
shall begin arrangements for the transfer of the Acquired Assets from Sellers to
Buyer,  on  reasonable  timing  considerations  for both Parties, and subject to
Buyer's  reasonable discretion as to when such transfer shall occur. The Parties
shall  assure  that  the  timing  and  logistics  related to the transfer of the
Acquired  Assets  shall  not  materially  affect the manufacture of the Acquired
Products in a negative manner.

                  (iv)  Design and Building Manufacturing Equipment. Immediately
following  Closing,  Buyer  and  Sellers shall mutually determine the design and
development  of  the  equipment,  machinery,  tools  and dies that is reasonably
necessary  for  Buyer  to  successfully  and independently manufacture, package,
validate,  and  commercially  produce  the Acquired Products (the "Manufacturing
Equipment").  Sellers  shall  provide  Buyer  with all necessary information and
assistance  requested  by  Buyer  in  order  to assist Buyer in constructing the
Manufacturing  Equipment, including without limitation, providing Buyer with all
existing drawings, specifications, samples, training manuals, vendor information
and  pricing  information  related to the Manufacturing Equipment which does not
include  future generations or new inventions of the Manufacturing Equipment. To
the  extent  Sellers  agree  to  design  and/or develop any of the Manufacturing
Equipment, the Parties shall enter into a separate statement of work which shall
set  forth  the specific design requirements, payments, and other specifications
related  to  such  project.  The  Parties  shall use all commercially reasonable
efforts  to  ensure  that  the  Manufacturing  Equipment is fully operational to
enable  Buyer  to successfully and independently manufacture, package, validate,
and  commercially  produce  the Acquired Products on or before the Manufacturing
Date.

         8. REMEDIES FOR BREACHES OF THIS AGREEMENT.

            (a)   Survival   of  Representations  and  Warranties.  All  of  the
representations  and  warranties  of  Sellers  contained  in  Section  3 of this
Agreement shall survive the Closing (even if Buyer knew or had reason to know of
any misrepresentation or breach of warranty at the time of Closing) and continue
in  full  force  and effect for a period of one (1) year thereafter; except that

<PAGE>
the  representations  and warranties of Sellers contained in Sections 3(a), 3(b)
and  3(d) of this Agreement shall survive the Closing and continue in full force
and  effect  until  the  applicable  statute  of limitations has run. All of the
representations and warranties of Buyer contained in Section 4 of this Agreement
shall survive the Closing (even if the Sellers knew or had reason to know of any
misrepresentation  or breach of warranty at the time of Closing) and continue in
full  force  and  effect for a period of one (1) year thereafter, at which point
such representations and warranties shall terminate.

            (b) Indemnification Provisions for Benefit of Buyer and Sellers.

                    (i) In the event either Seller has breached (or in the event
any  third  party alleges facts that, if true, would mean a Seller has breached)
any  of  its  representations  and  warranties  contained  in  Section 3 of this
Agreement  or  any  of  its  covenants or agreements contained in this Agreement
(including,  without  limitation,  the  supply agreement provisions set forth in
Section  9),  and, if there is an applicable survival period pursuant to Section
8(a)  above,  provided  that  Buyer  makes  a  written claim for indemnification
against  a  Seller  pursuant  to Section 8(c) below within such survival period,
then  Sellers  agree, jointly and severally, to indemnify Buyer from and against
the  entirety  of  any  Adverse  Consequences Buyer or its Affiliates may suffer
through  and  after  the  date  of  the claim for indemnification (including any
Adverse  Consequences  Buyer may suffer after the end of any applicable survival
period) resulting from, arising out of, relating to, or caused by the breach (or
the  alleged  breach).  Notwithstanding the foregoing (other than in relation to
fraud)  the  maximum  amount  that Buyer and its Affiliates may claim under this
Section 8(b)(i) shall not exceed $1,600,000 in the aggregate.

                    (ii)  In the event Buyer breaches any of its representations
or  warranties  contained in Section 4 of this Agreement or any of its covenants
or  agreements  contained  in this Agreement (including, without limitation, the
supply  agreement  provisions  set  forth  in  Section  9),  and, if there is an
applicable survival period pursuant to Section 8(a) above, provided that Sellers
makes  a written claim for indemnification pursuant to Section 8(c) below within
such  survival  period,  then Buyer agrees to indemnify Sellers from and against
the  entirety  of  any Adverse Consequences Sellers may suffer through and after
the  date  of  the claim for indemnification (including any Adverse Consequences
Sellers  may  suffer  after the end of any applicable survival period) resulting
from,  arising out of, relating to, or caused by the breach. Notwithstanding the
foregoing,  the  maximum  amount  of liability Buyer shall have to Sellers under
this Section 7(b)(ii) shall not exceed $1,600,000 in the aggregate.

                 (c) Matters Involving Third
                    Parties.

                    (i)   If  any  third  party  shall  notify  any  Party  (the
"Indemnified  Party")  with  respect to any matter (a "Third Party Claim") which
may  give  rise  to  a  claim  for  indemnification against any other Party (the
"Indemnifying  Party")  under  this  Section 8, then the Indemnified Party shall
promptly  notify  the  Indemnifying Party thereof in writing; provided, however,
that no delay on the part of the Indemnified Party in notifying the Indemnifying
Party  shall relieve the Indemnifying Party from any obligation hereunder unless
(and  then  solely  to  the  extent)  the Indemnifying Party thereby is actually
prejudiced.

                    (ii)  Any  Indemnifying  Party will have the right to defend
the  Indemnified  Party against the Third Party Claim with counsel of its choice
reasonably satisfactory to the Indemnified Party so long as (A) the Indemnifying
Party  notifies  the  Indemnified Party in writing within 15 business days after
the Indemnified Party has given notice of the Third Party Claim of its intention
to  contest  the  Third  Party  Claim (it being understood that the Indemnifying
Party  may  reserve  its  rights  as  to  whether or not it in fact is liable to
indemnify  the  Indemnified  Party),  (B)  the  Indemnifying  Party provides the
Indemnified  Party  with evidence reasonably acceptable to the Indemnified Party
that  the Indemnifying Party will have the financial resources to defend against
the  Third  Party  Claim  and  fulfill its indemnification obligations hereunder
(including  the  payment  in  cash  of  all  fees and costs associated with such
defense),  (C)  the  Third  Party Claim involves only money damages and does not
seek  an  injunction or other equitable relief, (D) settlement of, or an adverse
judgment  with  respect  to,  the  Third  Party  Claim is not, in the good faith
judgment  of the Indemnified Party, likely to establish a precedential custom or
practice  materially  adverse  to  the  continuing  business  interests  of  the
Indemnified  Party,  and  (E) the Indemnifying Party conducts the defense of the
Third Party Claim actively and diligently.

                    (iii)  So  long  as the Indemnifying Party is conducting the
defense  of the Third Party Claim in accordance with Section 8(c)(ii) above, (A)

<PAGE>
the  Indemnified  Party  may  retain  separate  co-counsel  at its sole cost and
expense  and  participate  in  the  defense  of  the  Third Party Claim, (B) the
Indemnified  Party  will  not consent to the entry of any judgment or enter into
any  settlement  with respect to the Third Party Claim without the prior written
consent of the Indemnifying Party (not to be withheld unreasonably), and (C) the
Indemnifying  Party  will not consent to the entry of any judgment or enter into
any  settlement  with respect to the Third Party Claim without the prior written
consent  of  the Indemnified Party (not to be withheld unreasonably), unless the
following  shall  apply  (in  which  case  the Indemnifying Party may settle and
compromise  such  Third  Party  Claim  without  the prior written consent of the
Indemnified Party): (x) there is no finding or admission of any violation of Law
or  any  violation of the rights of any person and no affect on any other claims
that may be made against the Indemnified Party; and (y) the sole relief provided
is  monetary damages that are paid in full in cash by the Indemnifying Party. If
the  Indemnified  Party  fails to consent to any settlement or compromise offer,
the  Indemnifying  Party  may continue to contest such Third Party Claim and, in
such  event,  (subject  always  to Section 8(b)(i)) the maximum liability of the
Indemnifying  Party  for such Third Party Claim shall not exceed such settlement
or compromise offer.

                    (iv)  In the event any of the conditions in Section 8(c)(ii)
above  is  or becomes unsatisfied, however, (A) the Indemnified Party may defend
against,  and  consent to the entry of any judgment or enter into any settlement
with  respect  to,  the  Third  Party Claim in any manner it reasonably may deem
appropriate  (and  the  Indemnified  Party  need not consult with, or obtain any
consent   from,  any  Indemnifying  Party  in  connection  therewith),  (B)  the
Indemnifying Party will reimburse the Indemnified Party (with cash) promptly and
periodically  for  the its reasonable costs of defending against the Third Party
Claim   (including  reasonable  attorneys'  fees  and  expenses),  and  (C)  the
Indemnifying  Party  will  remain  responsible  for any Adverse Consequences the
Indemnified  Party  may  suffer  resulting from, arising out of, relating to, or
caused  by  the Third Party Claim to the fullest extent provided in this Section
8.

            (d) Characterization of Payments. All indemnification payments under
this Section 8 shall be deemed adjustments to the Purchase Price.

         9. SUPPLY AGREEMENT.

            (a)  Supply of Acquired Products. For the duration of the Transition
Period,  Sellers  shall  manufacture  the  Acquired Products for, and supply the
Acquired  Products to, Buyer, according to the terms set forth in this Section 9
and  at  the  prices equal to Sellers' standard cost of the materials, labor and
overhead  related  to  such  Acquired Products as more particularly set forth on
Exhibit  H hereto. Sellers shall use commercially reasonable efforts to maintain
consistent  and  timely  shipment of the Acquired Products during the Transition
Period,  within  the minimum and maximum monthly forecasts for Acquired Products
set  forth  on  Exhibit  H.  Buyer  shall use commercially reasonable efforts to
provide  timely  order  changes  and other supply notices, and Sellers shall use
commercially  reasonable  efforts  to  accommodate  and fulfill all such orders,
changes  and  other supply notices provided by Buyer. Notwithstanding any of the
foregoing,  Buyer  shall  have  the  right,  exercisable at any time in its sole
discretion  to terminate the provisions of this Section 9 and to take control of
all manufacturing and similar processes related to the Acquired Products.

            (b)  Manufacture.  Sellers  shall  manufacture,  sterilize, package,
label  and ship the Acquired Products in accordance with the Specifications. For
purposes  of  U.S., European and International regulatory Laws and requirements,
Sellers  shall be deemed the "Manufacturer" of the Acquired Products distributed
in  the  U.S. during the Transition Period, and Buyer shall be the "Distributor"
of  the  Acquired  Products  distributed  internationally  during the Transition
Period.  The  Parties  agree  that  after  the  Transition Period, Buyer will be
responsible   to   obtain   such   international   regulatory  approvals  and/or
registrations  as  are  necessary to market and sell the Acquired Products under
Buyer's label in such jurisdictions outside of the U.S.

            (c)  Inspection.  Sellers  shall  perform the testing and inspection
procedures  described in the Specifications as to all Acquired Products prior to
shipment to ensure that they conform to the Specifications and will send Buyer a
certificate  with  respect  to  each  shipment.  Buyer will inspect all Acquired
Products  within  30 days after receipt and, except as provided in Section 9(i),
Buyer  must  notify Sellers within 30 days after receipt thereof if it discovers
that  any  of  the Acquired Products fail to meet the Specifications. Buyer will
return  and  Sellers  will  use  commercially  reasonable efforts to replace the
Acquired  Products  which  fail  to  meet  the  Specifications within 30 days of
Sellers'  notification  thereof.  Sellers  will reimburse Buyer for all costs of
shipment for the return of defective Acquired Products to Sellers.

<PAGE>
            (d) Records. Sellers will maintain, and will allow Buyer to examine,
upon two (2) days prior written notice to Sellers, its manufacturing and quality
assurance  records,  including lot numbers and other manufacturing documentation
necessary  to  ensure  traceability of the Acquired Products and compliance with
applicable  U.S.,  European, and international regulatory Laws and requirements.
Upon  expiration  of  the Transition Period, Sellers shall deliver copies of all
such records to Buyer.

            (e)  Labeling.  Sellers  shall  print  language on the labels of all
Acquired  Products  to  be distributed by Buyer in the U.S. that complies in all
respects  with  21 CFR 801 or any other Governmental Authority requirement which
may  be  applicable  from time to time. Sellers shall print language approved by
Buyer  on  the labels of all Acquired Products to be distributed internationally
indicating  that  Sellers  are  the  legal manufacturer outside the U.S. Sellers
shall  not change the Acquired Products labels without the prior written consent
of  Buyer.  Nothing herein grants Sellers the right to amend or alter any of the
Trademarks  of  the  Acquired  Intellectual  Property  or any other Intellectual
Property  of Buyer without Buyer's prior written consent. As of the Closing, all
Acquired  Intellectual  Property, Trademarks, and other Intellectual Property of
Buyer  related  to  the  Acquired  Assets  shall  remain  the sole and exclusive
property  of  Buyer  and  shall  not  be used by Sellers for any purpose without
Buyer's prior written consent.

            (f)  Purchases  and  Pricing.  Buyer  shall  purchase  the  Acquired
Products  from Sellers at the prices, and according to the payment, shipping and
other  terms  set  forth  on  Exhibit H attached hereto and incorporated by this
reference.

            (g)  Regulatory  Status.  Sellers  have obtained, and shall maintain
during  the  Transition  Period, "Pre-Market Notification" and clearance for use
from the United States Food and Drug Administration (the "FDA") for the Acquired
Products.  Specific  registration  numbers and supporting documentation shall be
made  available  from  Sellers'  regulatory department upon request. Sellers and
Buyer  represent,  warrant  and  agree  that  they  will  each  comply  with all
applicable   U.S.,   European   and  international  regulatory  Laws  and  other
requirements  applicable  to  their  particular roles and responsibilities under
this   Section   9,   including  without  limitation  those  Laws  and/or  other
requirements  concerning  labeling,  traceability,  reporting and record keeping
(e.g.  complaints, adverse reactions, recall information). Following the Closing
Date,  Buyer  shall  ensure that the Acquired Products are qualified for sale in
the  U.S.  and  internationally  and  shall obtain and own all registrations and
approvals.

            (h)  Regulatory; Complaints; Failure Analysis. The Parties represent
and  warrant that all complaints and "Medical Device Reporting" ("MDR") shall be
performed  in compliance with Medical Device Reporting for manufacturing written
by  the department of Health and Human Services FDA, March 1997, as amended from
time  to  time  and  other  applicable  requirements  pursuant  to the roles and
responsibilities  hereunder.  Sellers  will  file  all  reports  required by FDA
regulations,  with  duplicate  copies  to  Buyer. Sellers will also maintain and
manage  a  file  of  all  customer complaints received by Buyer and Sellers with
respect  to  the  Acquired Products. Upon either Party's receipt of any customer
complaint  alleging  that  any  Acquired  Product  is  defective  or other known
information  regarding the Acquired Products that may be caused by manufacturing
or  distribution  or  that  may  lead to recall or other regulatory action, each
Party  will  promptly  send to the other Party's complaint analysis department a
copy  of such complaint. If the allegedly defective Acquired Product is returned
to  Buyer  by  its  customer,  Buyer  will  perform  an initial internal failure
analysis  and may thereafter notify and forward the allegedly defective Acquired
Product to Sellers' complaint analysis department and require Sellers to perform
an  independent failure analysis of the returned Acquired Product(s). Buyer will
cooperate  with  and assist Sellers in submitting any report required by the FDA
and  will  provide  Sellers  with  duplicate copies of all such failure analysis
reports,  if  any.  Sellers shall, within 30 days of a written corrective action
plan  request  from Buyer, which shall include all known failure information and
samples (if available), provide Buyer with a corrective action plan.

            (i)  Recalls.  If  either  Buyer  or  Sellers  is  required  by  any
regulatory  agency  or  Governmental Authority, or Buyer determines based on its
good  faith  and  independent reasonable business judgment, to recall any of the
Acquired Products, the non-recalling Party will cooperate and assist in locating
and  retrieving  the  Acquired  Products to be recalled and providing applicable
documentation  to  the  recalling  Party in compliance with all applicable U.S.,
European  and  International  regulatory  Laws  and requirements. If a recall is
directly and solely the result of a Seller's failure to meet the Specifications,
and  not  due to misuse, reuse or reprocessing of the Acquired Products by Buyer
or  any third party, the Seller shall, at Buyer's option, (A) either (1) replace

<PAGE>
all  recalled  and  returned  Acquired  Products  at  no  cost  to Buyer, or (2)
reimburse  Buyer  for the full purchase price actually paid for the recalled and
returned  items, and (B) shall pay all of the reasonable costs incurred by Buyer
in  performing  the  recall.  If  the  recall  is  caused  by  misuse,  reuse or
reprocessing of the Acquired Products by Buyer or any third party or by a defect
in  labeling  as requested by Buyer, Buyer shall pay all of the reasonable costs
incurred by Sellers in performing the recall or in assisting Buyer to do so.

            (j)  Quality Assurance Inspections. Buyer may, up to three (3) times
during  the  Transition Period, perform random quality assurance inspections and
audits  of  each  Seller's manufacturing facility during regular business hours,
upon  twenty-four (24) hours advance written notice to such Seller. Sellers will
reasonably  cooperate  with Buyer's inspector and will provide Buyer with copies
of  all of Sellers' documents which are reasonably required by Buyer to properly
perform  any such inspection or audit. Sellers shall use commercially reasonable
efforts  to  implement  any  reasonable  recommendations submitted by Buyer as a
result of such inspections and audits which are required for Sellers to meet its
obligations under this Section 9.

            (k)  No Change to Acquired Products. Sellers warrant that no changes
will  be  made  in  the  Specifications  unless  the proposed changes are either
approved  by  Buyer in writing prior to implementation or required by applicable
Law.

            (l) Quality System Regulation. Sellers will manufacture the Acquired
Products  in  accordance  with  current  quality  system regulations for medical
devices  as  mandated  by  the  FDA  and  in  compliance  with any and all other
applicable  Governmental  Authority's  Laws,  including  without  limitation the
requirements of ISO 13485.

            (m)  Remedies. Each Seller represents and warrants that the Acquired
Products will be free from defects in materials and workmanship and will conform
in  all  material  respects  to  the  Specifications  when  delivered. NO SELLER
PROVIDES  ANY OTHER OR FURTHER WARRANTY, WHETHER EXPRESS, IMPLIED, STATUTORY, OR
OTHERWISE,  AND  SPECIFICALLY  DISCLAIMS  ANY  WARRANTY  OF  MERCHANTABILITY AND
FITNESS  FOR  A  PARTICULAR  PURPOSE,  WITH  RESPECT  TO  THE  PRODUCTS OR THEIR
PERFORMANCE,  EFFECTS,  OR  RESULTS. Notwithstanding the provisions of Section 8
related  to  minimum  or  maximum damage amounts and procedural matters, Sellers
will  replace  any  Acquired  Product found to be defective, provided that Buyer
notifies Sellers of such defect within the notice period stated in Section 9(c),
upon  return of such defective Acquired Product to Sellers and if such defective
condition  is  not  the  result of misuse, reuse or reprocessing by Buyer or any
third party.

            (n)  Product  Liability  Insurance.  Each  Party  will,  during  the
Transition   Period,  maintain  adequate  amounts  product  liability  insurance
coverage  to  cover  the  risks  and responsibilities hereunder, and in no event
shall  such  product  liability  coverage  be in an amount less than One Million
Dollars  ($1,000,000)  per  occurrence and Three Million Dollars ($3,000,000) in
the  aggregate.  The  Parties  shall promptly provide one another with a copy of
certificates evidencing such coverage upon written request.

            (o)  Limitation  of  Liability.  IN  NO  EVENT SHALL EITHER PARTY BE
LIABLE FOR SPECIFIC PERFORMANCE UNDER THIS SECTION 9 OR FOR COSTS OF PROCUREMENT
OF  SUBSTITUTE  PRODUCTS  OR  SERVICES,  LOST  PROFITS,  OR  ANY  CONSEQUENTIAL,
PUNITIVE,  SPECIAL,  INCIDENTAL, OR INDIRECT DAMAGES UNDER OR IN CONNECTION WITH
THIS SECTION 9, HOWEVER CAUSED AND ON ANY THEORY OF LIABILITY (INCLUDING WITHOUT
LIMITATION   NEGLIGENCE  OR  STRICT  LIABILITY).  THIS  LIMITATION  SHALL  APPLY
NOTWITHSTANDING ANY FAILURE OF ESSENTIAL PURPOSE OF ANY LIMITED REMEDY.

10. TERMINATION.

            (a)  Termination  of  Agreement.  The  Parties  may  terminate  this
Agreement as follows:

                  (i)  Buyer  and Sellers may terminate this Agreement by mutual
written consent at any time prior to the Closing;

                  (ii)  Buyer  may  terminate  this  Agreement by giving written
notice  to  Sellers  if the Closing shall not have occurred on or prior to March
31, 2009, by reason of the failure of any condition precedent under Section 5(a)
hereof  (unless  the  failure  results primarily from Buyer itself breaching any
representation, warranty or covenant contained in this Agreement);

                  (iii)  Sellers  may terminate this Agreement by giving written
notice  to Buyer if the Closing shall not have occurred on or prior to March 31,
2009,  by  reason  of  the failure of any condition precedent under Section 5(b)

<PAGE>
hereof  (unless  the  failure results primarily from any Seller itself breaching
any representation, warranty or covenant contained in this Agreement;

            (b)  Effect  of  Termination. If any Party terminates this Agreement
pursuant  to  Section  10(a)  above,  all  rights and obligations of the Parties
hereunder  shall terminate without any liability of any Party to any other Party
(except  for  any liability of any Party then in breach); provided, however, the
confidentiality  obligations  of  the  Parties  under  Section  7(d) above shall
survive termination.

11. MISCELLANEOUS.

            (a)  Press  Releases and Public Announcements. Buyer shall not issue
any  press  release  or  make any public announcement or comment relating to the
fact  of  or the subject matter of this Agreement without the prior notification
to  Hydromer.  Hydromer  shall  not  issue  any press release or make any public
announcement  or  comment  relating to the fact of or the subject matter of this
Agreement without the prior notification to Buyer.

            (b)  No  Third-Party  Beneficiaries. This Agreement shall not confer
any  rights  or  remedies  upon  any  Person  other  than  the Parties and their
respective  successors  and  permitted  assigns  with  respect to all rights and
obligations of such Parties hereunder.

            (c)  Entire  Agreement.  This  Agreement  (including  the Disclosure
Schedules  and  the  other  Exhibits  and schedules hereto and the documents and
certificates  required  to be delivered hereby) constitutes the entire agreement
between  the  Parties  and  supersedes  any prior understandings, agreements, or
representations  by  or between the Parties, written or oral, to the extent they
related in any way to the subject matter hereof.

            (d)  Succession and Assignment. This Agreement shall be binding upon
and  inure  to  the  benefit  of  the  Parties named herein and their respective
successors  and  permitted assigns. No Party may assign either this Agreement or
any of its rights, interests, or obligations hereunder without the prior written
approval of the other Party.

            (e)  Counterparts.  This  Agreement  may  be executed in one or more
counterparts,  each  of  which  shall  be  deemed  an  original but all of which
together  will  constitute one and the same instrument. A facsimile copy of this
Agreement or any counterpart hereto shall be valid as an original.

            (f)  Headings.  The section headings contained in this Agreement are
inserted  for  convenience  only  and shall not affect in any way the meaning or
interpretation of this Agreement.

            (g)  Notices.  All  notices,  demands  or other communications to be
given  or delivered under or by reason of the provisions of this Agreement shall
be  in  writing and shall be deemed to have been given when delivered personally
to  the  recipient  or  when sent by facsimile followed by delivery by reputable
overnight  courier  service  (charges  prepaid), one day after being sent to the
recipient  by  reputable overnight courier service (charges prepaid) or five (5)
days after being mailed to the recipient by certified or registered mail, return
receipt requested and postage prepaid. Any notice, demand or other communication
hereunder  may  be  given  by  any other means (including telecopy or electronic
mail),  but  shall  not be deemed to have been duly given unless and until it is
actually  received  by  the  intended recipient. Such notices, demands and other
communications shall be sent to the addresses indicated below:

If to Sellers:

                 Hydromer, Inc.
                 35 Industrial Parkway
                 Branchburg, New Jersey 08876
                 Attention:  President
         and

                 Biosearch Medical Products, Inc.
                 35 Industrial Parkway
                 Branchburg, New Jersey 08876
                 Attention: President

         and     Hydromer, Inc.
                 35 Industrial Parkway
                 Branchburg, New Jersey 08876
                 Attention:  General Counsel


<PAGE>
If to Buyer:

                 Merit Medical Systems, Inc.
                 1600 West Merit Parkway
                 South Jordan, Utah 84095
                 Attn: XXXX, Chairman and CEO
                 Facsimile: (801) 253-1600

                 and

                 Merit Medical Systems, Inc.
                 1600 West Merit Parkway
                 South Jordan, Utah 84095
                 Facsimile: (801) 208-4302
                 Attn: XXXX, General Counsel

or to such other address, to the attention of such other Person and/or with such
other  copy  or  copies  as  the  recipient Party has specified by prior written
notice  to  the  sending  Party.  If any time period for giving notice or taking
action  expires  on  a  day  which is a Saturday, Sunday or legal holiday in the
State  of  Utah  (any  other day being a "business day"), such time period shall
automatically  be  extended to, the next business day immediately following such
Saturday, Sunday or legal holiday.

            (h) Governing Law; Jurisdiction. This Agreement shall be governed by
and  construed in accordance with the domestic laws of the State of Utah without
giving effect to any choice or conflict of law provision or rule (whether of the
State of Utah or any other jurisdiction) that would cause the application of the
laws of any jurisdiction other than the State of Utah.

            (i)  Amendments  and  Waivers.  Any  term  of  this Agreement may be
amended  and  the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or prospectively)
only  by the mutual written consent of Buyer and Sellers. No waiver by any Party
of  any default, misrepresentation, or breach of warranty or covenant hereunder,
whether  intentional  or not, shall be valid unless the same shall be in writing
and  signed  by  the non-breaching Party, nor shall any such waiver be deemed to
extend  to  any  prior  or  subsequent  default, misrepresentation, or breach of
warranty or covenant hereunder or affect in any way any rights arising by virtue
of any prior or subsequent such occurrence.

            (j)  Severability.  Any  term or provision of this Agreement that is
invalid  or  unenforceable in any situation in any jurisdiction shall not affect
the  validity  or enforceability of the remaining terms and provisions hereof or
the  validity  or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.

            (k)  Expenses.  Buyer  and  Sellers will each bear its own costs and
expenses  (including  legal  fees and expenses) incurred in connection with this
Agreement and the transactions contemplated hereby.

            (l)  Construction.  The  Parties  have  participated  jointly in the
negotiation  and  drafting  of  this  Agreement.  In  the  event an ambiguity or
question  of  intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof shall
arise  favoring  or  disfavoring any Party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local, or
foreign  statute  or  law  shall  be  deemed  also  to  refer  to  all rules and
regulations  promulgated  thereunder, unless the context requires otherwise. The
word  "including"  shall mean "including without limitation." The Parties intend
that  each  representation,  warranty,  and covenant contained herein shall have
independent   significance.  If  any  Party  has  breached  any  representation,
warranty,  or  covenant  contained  herein  in  any respect, the fact that there
exists  another  representation,  warranty,  or  covenant  relating  to the same
subject  matter  (regardless  of  the  relative levels of specificity) which the
Party  has  not  breached  shall  not detract from or mitigate the fact that the
Party  is  in breach of the first representation, warranty, or covenant. The use
of  the neuter, male or female gender in the Transaction Documents shall include
all other each of the neuter, male and female gender.

            (m)  Incorporation  of  Exhibits  and  Schedules.  The  Exhibits and
Schedules  identified in this Agreement are incorporated herein by reference and
made a part hereof.

            (n)  Specific  Performance.  Each  of  the  Parties acknowledges and
agrees that the other Party would be damaged irreparably in the event any of the
provisions  of  Section 7(d) this Agreement are not performed in accordance with

<PAGE>
their specific terms or otherwise are breached. Accordingly, each of the Parties
agrees  that the other Parties shall be entitled to an injunction or injunctions
to  prevent  breaches  of  such  provisions  and  to  enforce  specifically this
Agreement  and  the  terms and provisions hereof in any action instituted in any
court  of  the  United  States or any state thereof having jurisdiction over the
Parties  and  the  matter  (subject to the provisions set forth in Section 11(o)
below),  in  addition to any other remedy to which it may be entitled, at law or
in equity.

            (o)  Waiver  of  Trial  By  Jury.  EACH  PARTY HEREBY WAIVES, TO THE
FULLEST  EXTENT  PERMITTED BY APPLICABLE LAW, TRIAL BY JURY IN ANY LITIGATION IN
ANY  COURT WITH RESPECT TO, IN CONNECTION WITH, OR ARISING OUT OF THIS AGREEMENT
OR  ANY  OF  THE  OTHER  TRANSACTION  DOCUMENTS  OR  THE  VALIDITY,  PROTECTION,
INTERPRETATION,  COLLECTION  OR ENFORCEMENT HEREOF OR THEREOF. EACH PARTY AGREES
THAT  THIS SECTION 11(o) IS A SPECIFIC AND MATERIAL ASPECT OF THIS AGREEMENT AND
EACH  OF  THE  OTHER TRANSACTION DOCUMENTS AND ACKNOWLEDGES THAT THE OTHER PARTY
WOULD  NOT  HAVE  ENTERED  INTO  THIS AGREEMENT AND CONSUMMATED THE TRANSACTIONS
CONTEMPLATED  HEREBY  IF  THIS SECTION 11(o) WERE NOT PART OF THIS AGREEMENT AND
THE OTHER TRANSACTION DOCUMENTS.

            (p)   Transfer   Taxes.   All  transfer,  documentary,  sales,  use,
value-added,  stamp,  registration  and  other  such  Taxes  and fees (including
penalties  and  interest)  incurred  in  connection  with  this Agreement or the
Transactions  must  be  paid  by  Sellers  when due, and Sellers shall, at their
expense,  file all necessary tax returns and other documentation with respect to
all  such transfer, documentary, sales, use, stamp, registration and other taxes
and fees.

      [remainder of page intentionally left blank; signature page follows]

















































<PAGE>


      IN  WITNESS  WHEREOF, the Parties hereto have executed this Asset Purchase
and Supply Agreement on as of the date first above written.

             BUYER:

                           MERIT MEDICAL SYSTEMS, INC.


                           By:  ______________________________________

                           Name:  ___________________________________

                           Title:  ____________________________________


            SELLERS:

         HYDROMER, INC.

                           By:  ______________________________________

                           Name:  ___________________________________

                           Title:  ____________________________________


                           BIOSEARCH MEDICAL PRODUCTS, INC.

                           By:  ______________________________________

                           Name:  ___________________________________

                           Title:  ____________________________________











































<PAGE>

                                   EXHIBIT A
                                   ---------

                                ACQUIRED ASSETS

                 ASSET LIST FOR COAGULATION PROBES PRODUCT LINE

ASSET TYPE       DESCRIPTION USED                     LOC.             AGE EST.
-------------------------------------------------------------------------------

                                  Data Removed

                   ASSET LIST FOR BILIARY STENTS PRODUCT LINE

ASSET TYPE       DESCRIPTION USED                          LOC.         AGE EST.
--------------------------------------------------------------------------------

                                  Data Removed






STENT INVENTORY AS OF 01/23/2009
--------------------------------

$XX,XXX


FINISHED GOODS FULL
STANDARD

$ XX,XXX


COAGULATION PROBE INVENTORY AS OF 01/23/2009
--------------------------------------------

$ XX,XXX



FULL
STANDARD
ITEM QUANTITY COST

$ XX,XXX
FINISHED GOODS




























<PAGE>
                                   EXHIBIT B

                         ACQUIRED INTELLECTUAL PROPERTY

FDA 510K (3)









































































<PAGE>
                                   EXHIBIT C

                        ALLOCATION OF THE PURCHASE PRICE

               [see attached; to be completed following Closing]









































































<PAGE>
                                   EXHIBIT D

                                  BILL OF SALE

                                 [see attached]









































































<PAGE>
                                   EXHIBIT E

                ASSIGNMENT AND ASSUMPTION OF ACQUIRED CONTRACTS

                          Biliary Stents Product Line

ConMed  Agreement  Distribution  Agreement, dated July 15, 2003, entered into by
and between Biosearch and C.R. Bard,

Inc.,  and  subsequently  assigned to ConMed pursuant to that certain Assignment
and  Assumption  Agreement  in  the  form  of a letter dated September 10, 2004,
between C.R. Bard, Inc. and ConMed.

                        Coagulation Probes Product Line

Biosearch Medical Products, Inc. International Distributor Agreement with PriMed
Canada  Inc.  of  Calgary  Canada,  signed  March  1,  2003  and renewed for one
additional year on July 1, 2008.

Biosearch  Medical  Products, Inc Distributor Agreement with Endochoice, Inc. of
Lawrenceville, GA signed May 2, 2008 and expires December 31, 2012.

























































<PAGE>
                                   EXHIBIT F

                               LICENSE AGREEMENT

                                 [see attached]









































































<PAGE>
                                   EXHIBIT G

                           NON-COMPETITION AGREEMENT

                                 [see attached]









































































<PAGE>
                                   EXHIBIT H

                       SUPPLY AGREEMENT PRICING AND TERMS

                       HYDROMER TRANSFER PRICING TO MERIT

                       BILIARY STENT & COAGULATION PROBE

                             PACKAGED/STERILE UNITS





































































<PAGE>




                                    BETWEEN


                     FOREFRONT MEDICAL TECHNOLOGY (PTE) LTD
                                 ("Purchaser")


                                      AND


                        BIOSEARCH MEDICAL PRODUCTS, INC.
                                   ("Vendor")












--------------------------------------------------------------------------------


                            ASSET TRANSFER AGREEMENT


--------------------------------------------------------------------------------













                                RAJAH & TANN LLP
                         Transnational Legal Solutions
                                 4 Battery Road
                         #26-01 Bank of China Building
                                Singapore 049908
                               Tel: 65 6535 3600
                               Fax: 65 6538 8598
                           E-mail: info@rajahtann.com
                           Website: www.rajahtann.com





















 CONTENTS


1       DEFINITIONS AND INTERPRETATION ....................................... 1

2       CONDITIONS ........................................................... 3

3       TRANSFER OF SALE ASSETS............................................... 4

4       CONSIDERATION ........................................................ 5

5       ARRANGEMENTS  PENDING COMPLETION ..................................... 5

6       COMPLETION............................................................ 6

7       CONFIDENTIALITY........................................................8

8       REPRESENTATIONS, WARRANTIES AND UNDERTAKINGS ......................... 9

8A      INDEMNITY ........................................................... 10

9       RESTRICTIVE COVENANTS ............................................... 11

10      MISCELLANEOUS ....................................................... 12

SCHEDULE 1................................................................... 16

SCHEDULE 2................................................................... 18

SCHEDULE 3................................................................... 19

SCHEDULE 4................................................................... 20













































                                       i
<PAGE>
                            ASSET TRANSFER AGREEMENT


THIS AGREEMENT is made this              of 2009.
                            ------------

BETWEEN:

(1)     FOREFRONT MEDICAL TECHNOLOGY  (PTE) LTD (Company Registration Number:
200002787K),  a  company  incorporated  in  Singapore  and having its registered
office at 35 Joo Koon Circle Singapore 629110 (the "Purchaser");

AND

(2)     BIOSEARCH  MEDICAL  PRODUCTS,  INC. (Company  Registration  Number:   NJ
#0100004118),  a  company  incorporated  in  New Jersey, the  United  States  of
America, and having  its registered office at 35 Industrial Parkway, Somerville,
NJ 08876 (the "Vendor").


WHEREAS:

Subject  to  the terms and conditions of this Agreement, the Vendor shall sell /
transfer / novate / assign (as the case may be) the Sale Assets to the Purchaser
and  the Purchaser shall acquire the title, rights, interests, benefits, claims,
demands and liabilities whatsoever accruing or subsisting in connection with the
Sale  Assets  at  the  Effective  Date  free from all liens, charges, mortgages,
trusts and encumbrances whatsoever (the "Transfer").


IT IS AGREED as follows:

1       DEFINITIONS AND INTERPRETATION

1.1     Definitions

            In  this  Agreement,  the  Schedules  and the Appendices, unless the
            context  otherwise requires, the following expression shall have the
            meaning set out against them:

            'Business'  means  the  business  of  the  Vendor  relating to or in
            connection  with  the  Sale  Assets  which will be carried on by the
            Purchaser  following  Completion  of  this Agreement, limited to the
            manufacture and sale of Naso-gastric and Jejunostomy Enteral Feeding
            Catheters.  For  the  avoidance  of  doubt, it is agreed between the
            Parties that the use of Hydromer coatings on devices manufactured by
            others is understood to be not part of the Business.

            'Business  Day'  means  any  day  other than a Saturday, Sunday or a
            gazetted public holiday in Singapore;

            'Coating  Services'  means  the  Vendor's other business of applying
            and/or  licensing Hydromer coatings and/or services to other medical
            device entities for use on their medical devices;

            'Completion' means completion of the Transfer as specified in Clause
            6;

            'Completion  Date'  means the completion date as specified in Clause
            6.1;

















                                       1
<PAGE>
            "Confidential   Information"   means   any   information   which  is
            proprietary and confidential to a party including but not limited to
            the  terms  and conditions of this Agreement, information concerning
            or   relating   in   any   way  whatsoever  to  its  distributorship
            arrangements,  principals,  any of the trade secrets or confidential
            operations,  processes  or inventions carried on or used by a party,
            any  information  concerning  the  organisation, business, finances,
            transactions  or  affairs of a party, dealings of a party, secret or
            confidential  information  which relates to the business or party or
            any  of  its  principals',  clients'  or  customers' transactions or
            affairs,  any  party's  technology, designs, documentation, manuals,
            budgets,  financial  statements  or  information, accounts, dealers'
            lists, customer lists, marketing studies, drawings, notes, memoranda
            and  the  information  contained therein, any information therein in
            respect   of  trade  secrets,  technology  and  technical  or  other
            information  relating  to  the  development,  manufacture,  clinical
            testing,   analysis,   marketing,   sale   or   supply  or  proposed
            development,  manufacture,  clinical  testing,  analysis, marketing,
            sale  or  supply  of  any  products  or  services  by  a  party, and
            information  and  material which is either marked confidential or is
            by  its  nature  intended to be exclusively for its knowledge of the
            recipient alone;

            'Contracts' means the contracts identified in Schedule 3;

            'Effective Date' means the date of this Agreement;

            'Encumbrance'  means  any  form  of  legal,  equitable,  or security
            interests,  including but not limited to any mortgage, assignment of
            receivables, debenture, lien, charge, pledge, title retention, right
            to acquire, security interest, hypothecation, option, right of first
            refusal,  any  preference arrangement (including title transfers and
            retention  arrangements  or  otherwise)  any  other  encumbrance  or
            condition  whatsoever  or  any  other  arrangements  having  similar
            effect;

            'Escrow  Account'  has  the  meaning  ascribed  to it at Clause 4.2b
            below;

            'Escrow  Agreement' means the agreement substantially in the form at
            Schedule  5  hereto  to  be entered into between the Parties and the
            Escrow  Agent  setting  out  the  escrow arrangement as described at
            Clause 4.2b below;

            'Escrow Amount' has the meaning ascribed to it at Clause 4.2b below;

            'Fixed Assets' means the Vendor's fixed assets, plant, machinery and
            tools  to  be acquired by the Purchaser as identified in Schedule 1,
            including the Raw Material Assets;

            'Hydromer  non-exclusive  License  Agreement'  means  the  agreement
            between   Hydromer,   Inc.   and  the  Purchaser  to  authorize  the
            non-royalty bearing use of the specified Hydromer formula for use on
            the Products manufactured by Purchaser;

            'Intellectual  Property'  means  the patents, knowhow, trade secrets
            and  other confidential information, registered designs, copyrights,
            design   rights,   trade   marks,  service  marks,  business  names,
            registrations  of  and applications to register any of the aforesaid
            items,  rights  in  the  nature of any of the aforesaid items in any
            country,  rights  in  the  nature  of  unfair competition rights and
            rights to sue for passing off as identified in Schedule 4;

            'Manufacturing Supply Agreement' is the agreement that specifies the
            transfer  pricing  to  Purchaser  by  Vendor  for the Product and/or
            assemblies during the Manufacturing Transition Period.











                                      2
<PAGE>
            'Manufacturing Transition Period' means the 90 day period after this
            Agreement  is  signed,  during which certain mutually agreed Product
            and/or assemblies will continue to be manufactured by Vendor pending
            Purchaser's  absorption  of  such  operations  and  approval by Bard
            Access Systems, Inc. and Conmed Endoscopic Technologies, Inc.

            'Parties'  means  collectively,  the  Vendor  and the Purchaser, and
            'Party' means any one of them;

            'Products'   means  Naso-gastric  and  Jejunostomy  Enteral  Feeding
            Catheters;

            'Raw  Material  Assets' are used to make up the product assembly and
            on-sold to the customer and are listed on Schedule 2.

            'S$' means the lawful currency of the Republic of Singapore;

            'Sale  Assets'  mean  all of the Fixed Assets, Intellectual Property
            and  Contracts  as  identified  in  the respective Schedules to this
            Agreement; and

            'Transfer' has the meaning ascribed to it at the Recital above.

1.2     Interpretation

1.2.1 The  headings  are  inserted for convenience only and shall not affect the
      construction of this Agreement.

1.2.2 Expressions  in the singular form shall include the plural and vice versa,
      and  all  references  to the masculine gender shall include the female and
      neuter genders and vice versa. Persons shall include corporations.

1.2.3 References  to  the 'Agreement' means this agreement as it may be amended,
      modified or supplemented from time to time.

1.2.4 Any   reference  in  this  Agreement  to  'Clauses'  and  'Schedules'  and
      'Recitals'  are  to  the  clauses  and  schedules  and  recitals  in  this
      Agreement.

1.2.5 Any  reference  to  a  statutory provision shall include such provision as
      from  time  to  time  modified,  amended  or  re-enacted  so  far  as such
      modification, amendment or re- enactment applies or is capable of applying
      to any transaction entered into hereunder.

1.2.6 References  in  this Agreement to any agreement or document including this
      Agreement  shall  include  such agreement or document as from time to time
      amended,  modified,  varied, novated, supplemented or replaced, unless the
      context shall otherwise require.



2       CONDITIONS

2.1     Conditions Precedent

        This Agreement is conditional upon the following:

      (a)   the completion of a legal due diligence exercise by the Purchaser on
            the  Sale  Assets  and the results of such exercise being reasonably
            satisfactory to the Purchaser;

















                                       3
<PAGE>
      (b)   the  novation  or  assignment  (as the case may be) of the Contracts
            from  the  Vendor to the Purchaser and all approvals and consents as
            may  be  necessary in connection with the novation or assignment (as
            the case may be) being obtained and effective on Completion Date and
            further  that  the terms of such novation or assignment (as the case
            may  be)  are  satisfactory  to  the  Purchaser  in  its  reasonable
            discretion;

      (c)   the  transfer  to  the  Purchaser  of the rights / title / benefit /
            interests in the Intellectual Property (the "IP Rights") and, in the
            Purchaser's   sole  discretion,  the  satisfactory  registration  or
            perfection of such IP Rights in favor of the Purchaser;

      (d)   the  execution  by  the  relevant parties on or before the Effective
            Date   of  the  Manufacturing  Supply  Agreement  and  the  Hydromer
            non-exclusive License Agreement;

      (e)   the  delivery of the Fixed Assets to the Purchaser in such manner as
            it  may  reasonably  direct  and  the  written  confirmation  of the
            Purchaser   confirming   its   acceptance   of  such  delivery  (the
            "Acceptance   Confirmation"),  provided  always  that  such  written
            confirmation  by  the  Purchaser shall not be unreasonably withheld;
            and

      (f)   the  execution by the Parties on or before the Effective Date of the
            Escrow  Agreement  and  the  payment  of  the Escrow Amount into the
            Escrow Account.

2.2     Undertaking by the Parties

      The   Vendor  undertakes  to  use  reasonable  endeavours  to  ensure  the
      satisfaction  and  fulfilment of the conditions specified in Clause 2.1 as
      soon as practicable and in any event by the Completion Date.

2.3     Effect of Non-Fulfilment of Conditions

      If  any  of  the  conditions  in Clause 2.1 is not materially satisfied or
      fulfilled  or waived by the Purchaser by the Completion Date or such later
      date as may be agreed between the Parties, the Purchaser shall be entitled
      by  notice  in  writing to the Vendor to terminate this Agreement in which
      event  this Agreement shall ipso facto cease and determine and save unless
      otherwise  expressly provided or in respect of any antecedent breach, none
      of  the Parties shall have any claim against the other for costs, damages,
      compensation   or  otherwise.  Without  limiting  the  generality  of  the
      foregoing  and  solely for the avoidance of doubt the Parties' obligations
      under Clause 7 shall survive the termination of this Agreement.



3       TRANSFER OF SALE ASSETS

3.1     Transfer

      Subject to the terms and conditions of this Agreement, it is hereby agreed
      between  the  Parties  that  the  Vendor  shall sell / transfer / novate /
      assign  (as  the  case  may  be)  the Sale Assets to the Purchaser and the
      Purchaser  shall  acquire  the title, rights, interests, benefits, claims,
      demands and liabilities whatsoever accruing or subsisting in respect of or
      in  connection  with  the  Sale Assets at the Effective Date free from all
      Encumbrances.

3.2     Passing of Title and Risk















                                       4
<PAGE>
      The title, rights, interests, benefits, claims, demands and liabilities in
      the  Sale  Assets  shall  be  deemed  to  have  passed to the Purchaser on
      Effective  Date. Save as provided at Clause 5.1(c) below, the Fixed Assets
      shall remain at the risk of the Vendor until Completion.


4       CONSIDERATION

4.1     Consideration

      The  Parties hereby agree that the consideration for the Transfer shall be
      the  sum  of  US$800,000.00  (the "Purchase Consideration") payable by the
      Purchaser to the Vendor in accordance with Clause 4.2 below.

4.2     Payment Method

      Subject  to  the terms of this Agreement, the Purchase Consideration shall
      be paid as follows:

      (a)   on  the  Effective  Date,  the  Purchaser  shall make payment to the
            Vendor of the sum of US$400,000.00, being a sum equivalent to 50% of
            the  Purchase  Consideration  by way of cheque, a cashier's order or
            bank  draft  drawn on a licensed bank in Singapore made out in favor
            of the Vendor or as it may direct; and

      (b)   on the Effective Date, the sum of US$400,000.00, being remainder 50%
            of  the  Purchase  Consideration  (the  "Escrow  Amount"),  shall be
            deposited into a bank account in Singapore (the "Escrow Account") to
            be  opened  by  the  "Escrow  Agent" and such Escrow Amount shall be
            released  to  the  Vendor  on  the  Completion Date (or otherwise as
            provided in the Escrow Agreement).


5       ARRANGEMENTS PENDING COMPLETION

5.1     Fixed Assets

      (a)   Delivery of Fixed Assets

            The Vendor shall be responsible for:

            (i)   the   preparation  of  any  necessary  documentation  and  the
                  procurement  of  any  necessary  consents  /  approvals  (from
                  contractual   counterparties   or  regulatory  authorities  or
                  otherwise) for the export of the Fixed Assets; and

            (ii)  the  disassembly  and  preparation  for  transportation of the
                  Fixed  Assets  and  such  disassembly  and  preparation  being
                  satisfactory  to  the Purchaser's representative (who shall be
                  present  at the disassembly and preparation stages), including
                  if necessary, the delivery of the Fixed Assets to such freight
                  forwarders  located  in  the  New Jersey Port U.S.A. as may be
                  nominated by the Purchasers; and

            (iii) providing  technical  support  to  the  Purchaser  as and when
                  required  during  reassembly  of  the  Fixed  Assets, provided
                  always  that  if it is necessary for an employee of the Vendor
                  to  travel to the Purchaser's facility, a fee of S$800 per day
                  per  employee  will  be billed to Purchaser in addition to all
                  reasonably incurred travel and lodging costs. In addition, the
                  Vendor  reserves  the  right  to  refuse  to send employees to
                  locations outside of the United States which it















                                       5
<PAGE>
                  deems as dangerous, provided always that such right of refusal
                  shall not be unreasonably exercised.

            The Purchaser shall be responsible for:

            (i)   making  the arrangements and payment for the transportation of
                  the Fixed Assets; and

            (ii)  the   preparation  of  any  necessary  documentation  and  the
                  procurement  of  any  necessary  consents  /  approvals  (from
                  contractual   counterparties   or  regulatory  authorities  or
                  otherwise) for the import of the Fixed Assets.

      (b) Acceptance of Delivery

          Subject to:

            (i)   the  reasonable  determination  by  the  Purchaser,  that  the
                  function  and/or performance of the Fixed Assets after correct
                  and  specified  reassembly  meets  the  acceptable performance
                  criteria  pursuant  to the specifications in the Device Master
                  File/Technical  Files,  such  determination to be made no more
                  than  30 days after delivery of all the Fixed Assets by Vendor
                  to the Purchaser's designated delivery location;

            (ii)  all  the  Fixed  Assets  (including parts thereof) having been
                  successfully  transported  and  delivered  to  the Purchaser's
                  designated  USA  freight  forwarder excluding molds located in
                  China  as  per  Schedule  1,  the  Purchaser shall deliver the
                  Acceptance Confirmation to the Vendor.

      (c) Insurance and Risk

          The  Purchaser  shall  be  responsible  for  insuring the Fixed Assets
          against all necessary risks during the period of delivery of the Fixed
          Assets, commencing on the transportation of the Fixed Assets until the
          beginning of reassembly.

5.2     Intellectual Property

      The  Vendors  shall, before the Completion Date, execute and/or deliver to
      the  Purchaser:  (a)  originals  of  any  certificate  of  registration of
      Intellectual  Property,  if  applicable;  (b) if applicable, all documents
      necessary  to  register  or  record the transfer of the IP Rights from the
      Vendor  to  the  Purchaser  and  all  documents evidencing such record and
      registrations  (whether  issued  by  any  government  authority, agency or
      otherwise);

      (c)   if  applicable,  all  other  documents that the Purchaser reasonably
            requires  for the transfer of the IP Rights to the Purchaser and the
            satisfactory  registration  or perfection of such IP Rights in favor
            of the Purchaser.


6       COMPLETION






















                                       6
<PAGE>
6.1     Venue

      Completion  shall  take  place  at  such place and time as mutually agreed
      between  the Parties but in any event not later than February 28, 2010, or
      such  other  date  as  the  Parties  may  mutually  agree  in writing (the
      'Completion Date').

6.2     Deliverables by the Vendor

      In  the  period  from  the  Effective  Date up to the Completion Date, the
      Vendor  shall  use  its  reasonable endeavours to deliver or procure to be
      delivered or make reasonably available to the Purchaser the following:

      (a)   such  documents  as  may  reasonably be required by the Purchaser to
            evidence the Transfer;

      (b)   such  documents  as  may  reasonably be required by the Purchaser to
            evidence  the  proper  authority and capacity of the Vendor to enter
            into,   exercise   its  rights  and  perform  and  comply  with  its
            obligations  under  this  Agreement,  including but not limited to a
            resolution  of  the  board  of directors of the Vendor approving the
            Transfer  and authorising the execution of this Agreement for and on
            behalf of the Vendor by the party who executes it.

6.3     Deliverables by the Purchaser

      Against  the compliance by the Vendor with Clause 6.2 above, the Purchaser
      shall deliver on Completion to the Vendor:-

      (a)   a  certified  copy  of a resolution of the board of directors of the
            Purchaser  approving  the  Transfer and authorising the execution of
            this  Agreement  for and on behalf of the Purchaser by the party who
            executes it; and

      (b)   unequivocal  instructions  in  writing  to the Escrow Agent (in such
            form  as  may  be  required by the terms of the Escrow Agreement) to
            release the Escrow Amount to the Vendor .

6.4     Obligations on Completion

      Without limitation to the above, on the Completion Date, the Parties shall
      deliver  to each other evidence reasonably satisfactory to the other Party
      that all relevant conditions stated at Clause 2.1 above to be fulfilled by
      the  Purchaser and / or the Vendor, as the case may be, have been complied
      with or satisfied and not breached.

6.5     Right to Terminate

      If  the  documents required to be delivered to any Party on Completion are
      not forthcoming for any reason or if, in any other respect, the respective
      provisions  of this Clause 6 are not fully complied with by any Party in a
      reasonable  manner,  the other Party shall be entitled (in addition to and
      without prejudice to all other rights or remedies available to it):

      (a)   to elect to terminate this Agreement and upon such termination, save
            in  respect  of  the  Sale  Assets  and  the  50%  of  the  Purchase
            Consideration  paid  to  the Vendor in accordance with Clause 4.2(a)
            above,  each Party shall, at their own cost, return to the other all
            documents  and  assets  previously  delivered  by / to each other in
            connection


















                                       7
<PAGE>
      with  this  Agreement  and  the  Escrow  Amount  shall  be released to the
      Purchaser (and both Parties shall instruct the Escrow Agent accordingly);

      (b)   to  effect  Completion  so  far  as practicable having regard to the
            defaults  which have occurred and without prejudice to its rights in
            respect thereof; or

      (c)   defer  Completion  to  a  date  not  more  than  30  days  after the
            Completion  Date  (in  which  case the provisions of this Clause 6.5
            shall apply to Completion as so deferred).


7       CONFIDENTIALITY

7.1     Confidential Information to be Kept Confidential

      Each  Party  shall keep confidential and shall procure that its respective
      employees,   agents   and  nominees  keep  confidential  all  Confidential
      Information,  and  shall  not,  and  shall  procure  that  its  respective
      employees,   agents   and   nominees  shall  not,  use  or  disclose  such
      Confidential  Information  except as permitted by law, or with the written
      consent  of  the other Parties, or in accordance with the order of a court
      of  competent  jurisdiction,  or  until the recipient of such Confidential
      Information can reasonably demonstrate:

      (a)   that  it  is or part of it is, in the public domain (other than as a
            result of disclosure in violation of its obligation pursuant to this
            Clause  7.1),  whereupon,  to  the  extent  that  it is public, this
            obligation shall cease;

      (b)   that  it  is required to be furnished to the bankers or investors or
            potential  investors  of  any  of  the  Parties or to any regulatory
            agencies  as  part  of  a  public  flotation exercise involving such
            Party;

      (c)   that  disclosure  of Confidential Information is or becomes required
            by   operation  of  applicable  law  including  without  limitation,
            pursuant   to  court  proceedings,  court  order,  applicable  stock
            exchange  or  governmental  regulation or otherwise by legal process
            (but only to the extent so required); or

      (d)   that  Confidential Information is disclosed pursuant to the rules of
            any   applicable  stock  exchange,  and  in  all  such  cases,  this
            obligation  shall  cease  but  only to the extent required under the
            respective circumstances.

7.2     Parties to Minimise Risk of Disclosure

      The  Parties  shall  take  all  reasonable  steps  to minimise the risk of
      disclosure  of  Confidential  Information,  by ensuring that only those of
      their  directors, employees, servants and agents whose duties will require
      them  to  possess  any  of such information shall have access thereto, and
      that they shall be instructed to treat the same as confidential.

7.3     Parties not to use Confidential Information

      Each  of  the  Parties  will  not  use, either while it is a Party to this
      Agreement  or  10 years thereafter, in a manner prejudicial or detrimental
      to the interests of either Party, any Confidential Information.
















                                       8

<PAGE>
7.4     Obligations in this Clause to Enure

      The  obligations  contained  in  this  Clause  shall enure, even after the
      termination  of  this Agreement, without limit in point of time except and
      until  any Confidential Information falls within the provisions of Clauses
      7.1.1(a), (b), (c) and (d).


8       REPRESENTATIONS, WARRANTIES AND UNDERTAKINGS

8.1     Purchaser's Representations, Warranties and Undertakings

      The  Purchaser  hereby  warrants  represents and undertakes to and for the
      benefit of the Vendor as follows:

      (a)   the  Purchaser  has full power and authority to enter into, exercise
            its  rights  and  perform and comply with its obligations under this
            Agreement;

      (b)   all  actions,  conditions and things required to be taken, fulfilled
            and  done  (including  the  obtaining  of any necessary consents) in
            order to:

            (i)   enable  the  Purchaser  to  lawfully  enter into, exercise its
                  rights  and perform and comply with its obligations under this
                  Agreement; and

            (ii)  ensure  that  those obligations are valid, legally binding and
                  enforceable, have been taken, fulfilled and done;

      (c)   upon  execution of this Agreement, the respective obligations of the
            Purchaser  hereunder shall be legally valid, binding and enforceable
            on the Purchaser in accordance with the terms hereof.

8.2     Vendor's Representations, Warranties and Undertakings

      The Vendor hereby warrants and represents to and undertakes to and for the
      benefit of the Purchaser as follows:

      (a)   during  the Manufacturing Transition Period to provide the Purchaser
            with  such  support  and  assistance as the Purchaser may require in
            relation  to  the  operation  of the Fixed Assets, including but not
            limited  to  the  secondment  of  employees to the Purchaser on such
            terms  to  be  agreed between the Parties, which terms shall include
            the particulars indicated at Clause 5.1 above;

      (b)   it  shall  do  all  that  is  necessary  to  procure the novation or
            assignment  (as the case may be) of the Contracts from the Vendor to
            the  Purchaser  on  terms  satisfactory  to  the  Purchaser  in  its
            reasonable  discretion, including providing reasonable assistance to
            the Purchaser with fulfilling the audit requirements imposed by Bard
            Access Systems, Inc. and Conmed Endoscopic Technologies, Inc.;

      (c)   the  Vendor has full power and authority to enter into, exercise its
            rights  and  perform  and  comply  with  its  obligations under this
            Agreement; and

      (d)   all  actions,  conditions and things required to be taken, fulfilled
            and  done  (including  the  obtaining  of any necessary consents) in
            order to:

















                                       9
<PAGE>
            (i)   enable  the Vendor to lawfully enter into, exercise its rights
                  and  perform  and  comply  with  its  obligations  under  this
                  Agreement; and

            (ii)  ensure  that  those obligations are valid, legally binding and
                  enforceable, have been taken, fulfilled and done;

      (e)   upon  execution of this Agreement, the respective obligations of the
            Vendor  hereunder shall be legally valid, binding and enforceable on
            the Vendor in accordance with the terms hereof;

      (f)   the  Vendor  has  full beneficial title to the Sale Assets free from
            any Encumbrance;

      (g)   the  Vendor  is  not  aware of any circumstances whereby following a
            change  in  the  ownership  or control of the Business the principal
            counterparties  or  customers  of the Business would cease to remain
            counterparties  or  customers in respect of the Business to the same
            extent and of the same nature as prior to the date hereof; and

      (h)   save  as disclosed to the Purchaser, the Transfer of the Sale Assets
            in accordance with this Agreement will not:

            (i)   contravene,  conflict  with,  or  result in a violation of, or
                  give  any authority or other person the right to challenge the
                  transfer or to exercise any remedy or obtain any relief under,
                  any  legal  requirement  or any order to which the Vendor, the
                  Business or any of the Sale Assets may be subject; or

            (ii)  result  in  the  imposition  or creation of any Encumbrance or
                  liability  upon  or  with  respect to the Business or the Sale
                  Assets.

8.3     Representations, Warranties and Undertakings to be Separate

      The  representations,  warranties and undertakings given under or pursuant
      to this Clause 8:

      (a)   shall  be  separate  and  independent  and  shall  not be limited by
            anything in this Agreement;

      (b)   shall  be  fulfilled  down  to,  and will be true and correct in all
            respects and not misleading at the date of Completion as if they had
            been entered into afresh; and

      (c)   shall  not  in  any respect be extinguished or affected by any other
            event or matter whatsoever, except by a specific and duly authorised
            written  waiver  or  release by the relevant party for whose benefit
            the representation, warranty and undertaking was given.


8A      INDEMNITY

8A.1    Mutual Indemnity

      Notwithstanding anything in this Agreement, each Party shall indemnify and
      keep   the  other  Party  indemnified  (even  after  termination  of  this
      Agreement) against any and/or all liabilities, expenses, damages and costs
      of  all  demands,  actions  and  other proceedings against the other Party
      (including  legal  costs  on  a  full indemnity basis) arising directly or
      indirectly  as  a  result  of  or  in connection with any breach, delay or
      non-performance  by the first Party of its obligations, whether express or
      implied, under this Agreement and the parties also agree that,














                                       10
<PAGE>
      notwithstanding  the  generality of the foregoing, the indemnity contained
      in  this  Clause  8A  shall  extend  to  cover any and/or all liabilities,
      expenses,  damages and costs of all demands, actions and other proceedings
      against  the  Purchaser  (including legal costs on a full indemnity basis)
      arising in connection with the Contract.

8A.2    Validity and Enforceability of Indemnity

      For the avoidance of any doubt, the Parties hereby agree that the validity
      and  enforceability  of this Clause 8A shall not be impaired or diminished
      or discharged or affected by:-

      (a)   any   delay,   time,   indulgence,   forbearance,  waiver,  release,
            discharge,  compromise  or  consent  at any time given or granted by
            either Party;

      (b)   any amendment or variation from time to time made to this Agreement;
            and

      (c)   the illegality or invalidity or unenforceability of any provision in
            this Agreement.

8A.3    Release

      Any  obligation  or  liability of either Party under this Clause 8A may in
      whole  or in part be released, compounded or compromised by a Party in its
      absolute discretion without in any way prejudicing or affecting its rights
      against the other Party under the same or a like obligation or liability.


9       RESTRICTIVE COVENANTS

9.1     Definitions

      In  this  Clause,  the  following  terms shall have the following meanings
      respectively, namely:

      (a)   'Prohibited   Period'   means  the  period  commencing  on  the  day
            immediately  following  the  Effective  Date and ending on the third
            anniversary of the Completion Date;

      (b)   'Prohibited  Territorie'  means worldwide including all territories
            in which the Purchaser carries on business from time to time;

      (c)   'Relevant  Capacity'  means,  in  relation  to the Vendor and or any
            company  related  to  or  associated  with  it (each a "Vendor Group
            Company"),  for  its  own account or for that of any person, firm or
            company  and  whether through the medium of any company, corporation
            or  any other entity controlled by it (for which purpose there shall
            be  aggregated  with its shareholding or ability to exercise control
            the  shares  held  or controlled by any person connected with or any
            company  related  to the Vendor) or as principal, partner, director,
            employee, consultant or agent.

9.2     Non-Competition

      The  Vendor  hereby  further  jointly  and  severally  undertake  with the
      Purchaser and its successors in title that they will not, and will procure
      that  no  Vendor  Group  Company will, in any Relevant Capacity during the
      Prohibited Period:

















                                       11
<PAGE>
      (a)   be  directly  or  indirectly  employed  or  engaged  in  each of the
            Prohibited  Territories  in  any business which is of the same as to
            the   Business   save  unless  such  likelihood  of  competition  is
            objectively unforeseeable during the Prohibited Period;

      (b)   directly   or   indirectly  carry  on  in  each  of  the  Prohibited
            Territories  for  its own account either alone or in partnership (or
            be concerned in any Relevant Capacity in any corporation engaged in)
            any business which is of the same or similar type to the Business or
            is  likely to be in competition with the Business or be concerned or
            interested  in  the Prohibited Territories in any such business save
            for  the  holding of or trading in (i) less than 20 per cent. of the
            outstanding  share  capital of a corporation the shares of which are
            listed on any stock exchange or (ii) any investment funds, including
            without  limitation, investments in venture capital, mutual funds or
            bonds  provided  always  that  this  restriction  shall not apply in
            respect  of any business arrangement concerning the Coating Services
            by the Vendor;

      (c)   directly  or indirectly assist with technical advice or in any other
            way  any  person,  firm or company engaged in each of the Prohibited
            Territories  in any business which is of the same or similar type to
            the  Business  or  is likely to be in competition with the Business,
            save   unless   such   likelihood   of  competition  is  objectively
            unforeseeable during the Prohibited Period provided always that this
            restriction  shall  not apply in respect of any business arrangement
            concerning the Coating Services by the Vendor;

      (d)   directly  or  indirectly  canvass or solicit in competition with the
            Business  the  custom  of any person, firm or company who has within
            three  (3)  years prior to the Effective Date been a customer of the
            Vendor  (in  connection with the Business) or the Purchaser provided
            always  that  this  restriction  shall  not  apply in respect of any
            business  arrangement concerning the Coating Services by the Vendor;
            or

      (e)   directly  or indirectly induce or seek to induce any person which is
            an  employee of the Purchaser during the Prohibited Period to become
            employed,  whether  as  employee,  consultant  or  otherwise, by the
            Vendors  or  by  any person, firm or company engaged in any business
            which is of the same or similar type to the Business or is likely to
            be in competition with the Business.

9.3     Reasonableness

      While the restrictions set out in Clause 9.2 are considered by the Parties
      to  be  reasonable  in  all  the  circumstances  and  no  greater  than is
      reasonable and necessary for the protection of the Purchaser, it is agreed
      that  if any one or more of such restrictions shall either taken by itself
      or  themselves together be adjudged to go beyond what is reasonable in all
      the  circumstances  for  the  protection  of  the  Purchaser's  legitimate
      interest but would be adjudged reasonable if any particular restriction or
      restrictions  were  deleted or if any part or parts of the wording thereof
      were deleted, restricted or limited in any particular manner then the said
      restrictions shall apply with such deletions, restrictions or limitations,
      as the case may be.



10      MISCELLANEOUS

10.1    Entire Agreement

      This Agreement (together with any documents referred to herein or executed
      contemporaneously  by the Parties in connection herewith) embodies all the
      terms  and  conditions  agreed  upon between the Parties as to the subject
      matter of this Agreement and










                                       12
<PAGE>
      supersedes  and  cancels  in  all  respects  all  previous  agreements and
      undertakings,  if  any,  between  the  Parties with respect to the subject
      matter hereof, whether such be written or oral.

10.2    Schedules to this Agreement

      The Schedules to this Agreement and the provisions contained therein shall
      have  the  same  force  and  effect  as  if  set  out  in the body of this
      Agreement.

10.3    Release

      Any liability to any Party under this Agreement may in whole or in part be
      released, compounded or compromised, or time or indulgence given, by it in
      its  absolute  discretion  as regards the other Party under such liability
      without  in any way prejudicing or affecting its rights against such other
      Party.

10.4    Indulgence, Waiver, Etc.

      No  failure  on  the  part of either Party to exercise and no delay on the
      part  of  such  Party  in exercising any right hereunder will operate as a
      release  or waiver thereof, nor will any single or partial exercise of any
      right under this Agreement preclude any other or further exercise of it or
      any other right or remedy.

10.5    Continuing Effect of Agreement

      All  provisions  of this Agreement shall not, so far as they have not been
      performed  at  Completion,  be  in any respect extinguished or affected by
      Completion  or  by any other event or matter whatsoever and shall continue
      in  full force and effect so far as they are capable of being performed or
      observed.

10.6    Successors and Assigns

      This Agreement shall be binding on and shall enure for the benefit of each
      of the Parties' successors and assigns. Any reference in this Agreement to
      any of the Parties shall be construed accordingly.

10.7    Time of Essence

      Any  time, date or period mentioned in any provision of this Agreement may
      be  extended  by  mutual  agreement between the Parties in accordance with
      this Agreement or by agreement in writing but as regards any time, date or
      period  originally  fixed  or  any  time,  date  or  period so extended as
      aforesaid time shall be of the essence.

10.8    Further Assurance

      At  any time after the Effective Date, each Party shall, and shall use its
      best  endeavours  to procure that any necessary third party shall, execute
      such  documents  and  do  such  acts  and  things  as  the other Party may
      reasonably  require  for  the  purpose of giving to such other Parties the
      full benefit of all the provisions of this Agreement.

10.9    Remedies

      No remedy conferred by any of the provisions of this Agreement is intended
      to  be  exclusive of any other remedy which is otherwise available at law,
      in  equity, by statute or otherwise, and each and every other remedy shall
      be cumulative and shall be in addition to every other















                                       13
<PAGE>

      remedy  given hereunder or now or hereafter existing at law, in equity, by
      statute  or otherwise. The election of any one or more of such remedies by
      any  Party  shall  not  constitute  a waiver by such Party of the right to
      pursue any other available remedies.

10.10   Costs and Expenses

      Each  Party  shall  bear  its  own legal, professional and other costs and
      expenses incurred by it in connection with the negotiation, preparation or
      completion of this Agreement and the Transfer.

10.11   Severability of Provisions

      If  any  provision  of  this  Agreement  is held to be illegal, invalid or
      unenforceable  in  whole  or  in  part in any jurisdiction, this Agreement
      shall,  as  to  such  jurisdiction,  continue  to be valid as to its other
      provisions  and the remainder of the affected provision; and the legality,
      validity  and  enforceability  of such provision in any other jurisdiction
      shall be unaffected.

10.12   Communications

10.12.1 Notices To Be In Writing

      All  notices,  demands or other communications required or permitted to be
      given  or  made  hereunder shall be in writing and delivered personally or
      sent  by  prepaid  registered post with recorded delivery, or by facsimile
      transmission addressed to the intended recipient thereof at its address or
      at  its  facsimile number, and marked for the attention of such person (if
      any),  designated  by  it  to  the  other Parties for the purposes of this
      Agreement or to such other address or facsimile number, and marked for the
      attention of such person, as a Party may from time to time duly notify the
      other in writing.

10.12.2 Contact Addresses And Numbers

      The addresses and facsimile numbers of the Parties for the purpose of this
      Agreement are specified below:

      The Vendor
      ----------

      Address  :  Biosearch  Medical  Products,  Inc  ..,
                  35 Industrial Parkway,
                  Branchburg, NJ, 08876, USA
      Attention : President
                  Martin von Dyck
      Facsimile No. : USA 908-722-5024

      The Purchaser
      -------------

      Address  :  Forefront  Medical  Technology  (Pte)  Ltd
                  35 Joo Koon Circle Singapore  629110
      Attention : Chief Executive Officer
      Facsimile No. : +65 63493878

10.12.3 Deemed Delivery Date


















                                       14
<PAGE>

      Any such notice, demand or communication shall be deemed to have been duly
      served (if delivered personally or given or made by facsimile) immediately
      or (if given or made by letter) two (2) Business Days after posting and in
      proving the same it shall be sufficient to show that personal delivery was
      made  or  that the envelope containing such notice was properly addressed,
      and  duly  stamped  and  posted  or  that  the  facsimile transmission was
      properly addressed and despatched.

10.13   Counterparts

      This  Agreement  may be signed in any number of counterparts, all of which
      taken together shall constitute one and the same instrument. Any Party may
      enter into this Agreement by signing any such counterpart.

10.14   Contracts (Rights of Third Parties) Act (Cap. 53B)

      A  person  who  is not a Party to this Agreement shall have no right under
      the  Contracts  (Right  of Third Parties) Act (Cap. 53B) to enforce any of
      the terms of this Agreement.

10.15   Governing Law and Jurisdiction

      This Agreement shall be governed by, and construed in accordance with, the
      laws  of  Singapore  and  the  Parties  hereby  irrevocably  submit to the
      non-exclusive  jurisdiction  of  the  courts  of  Singapore  and waive any
      objection  to  proceedings in any such court on the grounds of venue or on
      the  grounds  that  the  proceedings  have been brought in an inconvenient
      forum.  The submission by the Parties herein shall not affect the right of
      any  Party  to  take  proceedings  in any other jurisdiction nor shall the
      taking  of  proceedings in any jurisdiction preclude any Party from taking
      proceedings in any other jurisdiction.

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                                       15
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                                   SCHEDULE 1

                      Asset list for NG-Tube Product Line

                                        Date Removed

                       Asset list for J-Tube Product Line

                                        Date Removed




































































                                       16
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                                       17
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                                   SCHEDULE 4

                             Intellectual Property

MOD/SOP's  required  to manufacture Products to GMP and ISO standards: Contained
in Master Device/Technical File.

Drawings  of  compentens  and  assemblies:  Contained in Master Device/Technical
File.

One  (1) Master Device/Technical File for Naso-Gastric Feeding Catheters.

One (1) Master Device/Technical File for Jejunostomy Feeding Catheters.


There are no patents as part of this Agreement.





























































                                       20
<PAGE>
                                   SCHEDULE 5

                                ESCROW AGREEMENT










































































                                       21
<PAGE>

IN WITNESS WHEREOF the parties hereto have signed this Agreement on the  day and
year above written.

SIGNED by [NAME] Mark Samlal  )
for and on behalf of          )
FOREFRONT MEDICAL TECHNOLOGY  )
(PTE.) LTD.                   )         /s/ Mark Samlal
                                        ---------------------------
in the presence of:                     [NAME]


/s/ Gan Ying Hui
---------------------------
Witness  Gan Ying Hui
         Group Financial Controller



SIGNED by [NAME] Martin von Dyck  )
for and on behalf of              )
BIOSEARCH MEDICAL PRODUCTS,       )
Inc.                              )     /s/ Martin von Dyck
                                        ---------------------------
in the presence of:                     [NAME]


/s/ Robert Moravsik
---------------------------
Witness   Vice President
          11/19/07














































                                       22