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, 2011



Commission File Number 0-10683



HYDROMER, INC.

_________________________________________________________________

(Exact name of registrant as specified in its
charter)



New Jersey

_______________________________________________________________

(State of incorporation)



22-2303576

___ _____________ ________________________________________________________
______

(I.R.S. Employer Identification No.)





35 Industrial Parkway, Branchburg, New Jersey

________________________________________________________________________________________________________________________________________

(Address of principal executive offices)





08876-3424



________ _____________________________

(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, 2011 was approximately $2,039,615.

The number of shares
of Registrant's Common Stock outstanding on September 15, 2011 was 4,772,318.

Portions of the
Audited Financials Statements for the year ended June 30, 2011 are incorporated by reference in Part II of this report. Portions
of the Proxy Statement of Registrant dated September 23, 2011 are incorporated by reference in Part III of this report.








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 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.











PART I  Item 1. BUSINESS General Hydromer, Inc (the “Company”)
is a polymer research and development company organized as a New Jersey Corporation in 1980 for the purposes of developing
polymeric complexes for commercial use in the medical, commercial, cosmetics and animal health markets.  Until September 1982, approximately 99%
of the outstanding common stock, without par value (the “Common Stock”), of the Company, was owned by Biosearch
Medical Products Inc. (“BMPI”), which in turn was controlled by Manfred Dyck, who is the Company’s current
Chief Executive Officer, Director and the Chairman of the Board. On September 16, 1982, BMPI distributed its shareholdings in
the Company pro rata to the holders of its common stock. In connection with this distribution, the Company granted to BMPI an
exclusive, worldwide perpetual, royalty-free license for the use of Hydromer technology in connection with the development,
manufacture and marketing of biomedical devices for enteral feeding applications. On February 4, 2000, the Company acquired
all outstanding stock of BMPI for $0.20 per share, and now manages BMPI as a subsidiary.  The Company owns several process and applications
patents for Hydromer® coatings; (“Hydromer”). These polymers become extremely lubricious (slippery) when
wet. Techniques have been developed for grafting or applying this substance onto a broad variety of materials, including other
polymers like polyurethane, polyvinyl chloride, and silicone elastomers, ceramics and metals. The Company has also been issued
patents for permanent anti-fog materials, hydrophilic polyurethane foams, hydrophilic polyurethane blends, hydrophilic polyvinylbutyral
alloys, several biocompatible hydrogels and an anti-bacterial medical material. The Company continues to actively evaluate other
new market opportunities for its polymer technology specifically in neurology and cardiology.  The Company also owns various
trademarks, including AQUAMERE®, a cosmetic intermediate with water resistant film forming
properties; AQUATRIX®, a cosmetic hydrogel; BIOSEARCH®, medical device product
lines; Dermaseal®, a dermal barrier film product for the prevention of contact
dermatitis; DRAGONHYDE®, hoof enhancement products; HYDROMER®, hydrophilic and hydrophobic
coatings; Sea-Slide®, a coating for watercraft hulls; and T-HEXX®, a barrier teat dip product
group for the prevention of mastitis in dairy animals.  The Company’s patents are typically broad
based, having a multitude of different applications across various industries. Accordingly, the Company currently operates in the
medical, commercial, cosmetics and animal health markets.  MEDICAL From its inception in 1980 to mid-1984,
the Company was primarily engaged in R&D activities related to Hydromer 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.  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 can
be 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 to 2010 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, 2011, the Company has supply
and support agreements with 30 companies covering the application or availability of Hydromer coatings to the following devices: ·angioplasty balloon catheters, ·biliary and pancreatic stents, ·cardiovascular implantables, ·cardiovascular microcatheters, ·central venous catheters, ·embolization delivery devices, ·enteral feeding products, ·female contraceptive devices, ·foley catheters, ·guidewires, ·guiding and umbilical catheters, ·infusion microcatheters, ·inter/intra-ocular lenses, ·intra-occular lense inserts, ·liposuction devices, ·neurovascular microcatheters, ·PTCA catheters, ·urinary catheters, ·certain urological devices, and ·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
   for wound care, implants, drug delivery, burn care, ultrasonic couplants and cosmetic uses are available but not yet commercialized.  The Company’s hydrogel technology offers
biocompatibility, flexibility, and ease of use and processing. It also allows for the stabilization of biomolecules, cell cultures,
drugs and other active substances without potentially damaging external energy sources. It is absorbent, inherently self-adhesive
but peels away cleanly and is naturally soothing. Other than our bio-adhesives and medical coatings, which are one part systems,
to form the gel entails simply to mix the two parts together: no heat, no chemical cross linkers 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 The Company offers 510K/CE marked medical devices on
an OEM basis and private label through its ISO 13485:2003 certified and FDA registered Biosearch Medical Products subsidiary.
Most recently, the Company produced bipolar coagulation probes; placement catheters, biliary stents; jejunal and enteral feeding
accessories; guidewires; biofeedback devices for fecal and urinary incontinence; and other endoscopic accessories. The bipolar
coagulation probe and biliary stent product lines were sold to Merit Medical System, Inc. in 2009, and in 2010, the Company completed
the transition period of its sales of the Jejunostomy Catheter and Nasogastric Feeding Catheter business to Forefront Medical Technology
(PTE) Ltd. Currently remaining is its biofeedback business.  HYDROMER Coating Services The acquisition of BMPI in 2000 allowed
for the Company to realize another 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.  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. The Company also haveFood grade Anti-Fog coatings formulated with materials that are generally recognized
as safe for food contact as confirmed by independent laboratory extraction testing.  The Company also offers a Sea-Slidecoating
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 asthe firstno-drip and water resistant barrier products on the market preventingenvironmental
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.  Theannual U.S. market forbarrier teat dips is estimated to be $100-130 million at the farm level. Barrier products containing T-HEXXtechnology
has 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 traditionalpre-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 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 NaturelTM External Teat Sealant, a triclosan free external teat sealant for dry cows, Sani-SprayTM non-barrier
dips and sprays and Dragonhyde® Hoof Bath Concentrate
(“Dragonhyde HBC”). Dragonhyde
HBC competes against Copper Sulfate and Formalin in hoof baths yet it does not contain such heavy metals or carcinogenic products.
An independent clinical study conducted by Cornell University and published in the August 2010 edition of the Journal of Dairy
Science concluded that Dragonhyde HBC outperformed typical Copper
Sulfate and Formalin usage.  The Company has invested significantly in clinical
research, patents, promotion, vendor partnerships and advertising via print media, trade shows and the Internet to support this
business and continues to do so: both domestically as well as abroad. New products continue to be developed.  Products Coating solutions for use on medical
devices, cosmetic intermediaries, hydrogels and teat barrier dips/sprays are manufactured and sold by the Company to its 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) medical products. The Company
does not have any significant customers.  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 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: 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, 2011, 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 cosmetic materials, non-leaching biostatic coatings,
barrier film and barrier teat dip and hoof bath compositions and Chitosan gels and others.  The Company owns the registered trademarks
“Aquamere”, “Aquatrix”, “Biosearch”, “Dermaseal”, “Dragonhyde”, a dragon
logo, "Hydromer", “Sea-Slide” and “T-HEXX” in the United States and other
countries.  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, 2011, the Company and
its subsidiary had forty-three active full-time employees. The Chief Executive Officer is Manfred F. Dyck, who is also Chairman
of the Board. The Company does not have a collective bargaining agreement with any of its employees and considers its relationship
with its employees to be very good.  Government Regulations The uses of the Company's medical, animal
health and cosmetic products come under the jurisdiction of the FDA, as well as other federal, state and local agencies, and similar
agencies in other countries.  In connection with the Company's support agreements,
it is generally the obligation of the customer to conform to any required FDA pre-market notification or other regulations. To
the Company's knowledge, all such customers who are marketing medical products are in such compliance. The Company expects to market
additional applications of Hydromer’s technologies to existing products, or products introduced by it, which may be subject
to such FDA review and/or foreign regulatory agencies’ procedures as proof of safety and effectiveness of the applications
or products, or adherence to prescribed design standards. There can be no assurance that such approvals would be forthcoming or
of compliance with such standards. Any such failure to obtain approvals or non-compliance might have a significant adverse effect
on the Company. However, the Company intends to make every effort to obtain all necessary approvals and to comply with such standards,
and in the case of its support agreements, to require the customers to obtain such approvals.  The Company contract coats medical products
through its Biosearch Medical Products subsidiary (“Biosearch”), whose activities come under the jurisdiction of the
FDA. It is the policy of the Company to use the FDA regulations as guidelines during manufacturing of Hydromer coatings.  The Company is also subject to federal and
state regulations dealing with occupational health and safety and environmental protection. It is the policy of the Company to
comply with these regulations and be responsive to its obligations to its employees and the public.  The Company’s electronically filed reports
are available at www.hydromer.com/sec and www.sec.gov.  Executive Officers The executive officers of the Company are
as follows:


|Name               |  |  | Position with Company                                                                  |  |  |  |  |  |  |  |  | Age as of Aug. 31, 2011
|------------------ |  |  | -------------------------------------------------------------------------------------- |  |  |  |  |  |  |  |  | -----------------------
|Manfred F. Dyck    |  |  | Chariman of the Board, Chief Executive Officer and President                           |  |  |  |  |  |  |  |  | 76                     
|Martin C. Dyck     |  |  | Executive Vice-President, Operations and President BiosearchMedical Products subsidary |  |  |  |  |  |  |  |  | 49                     
|Rainer Gruening    |  |  | Vice-President, Intellecutal Property, T-HEXX Int'l Sales                              |  |  |  |  |  |  |  |  | 68                     
|John Konar         |  |  | Vice-President, Quality Assurance and Director of Human Resources                      |  |  |  |  |  |  |  |  | 62                     
|Robert Y. Lee      |  |  | Vice-President, Finance, Chief Financial Officer and Treasurer                         |  |  |  |  |  |  |  |  | 45                     
|Robert J. Moravsik |  |  | Senior Vice-President, General Counsel and Secretary                                   |  |  |  |  |  |  |  |  | 68                     

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. 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.  
 
 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-five 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. The Company’s current active ticker symbol is: “HYDI.PK”. The
Company’s common stock traded at prices ranging between $0.32 and $0.99 in the fiscal year 2011 and between $0.30 and $1.10
in the fiscal year 2010. 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, 2011 was 216. 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, 2011, 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, 2011 were $5,515,015 as compared to $6,200,504 for the same period last year, a decrease of $685,489
(11.1%). Product
sales and services revenues were $4,548,066 for the 2011 fiscal year as compared to $5,205,245 the prior fiscal year, a 12.6%
decrease or $657,179. License
royalties and contract payments were $966,949 in fiscal 2011, comparable to the $995,259 the year before. Management
Comment: The prior fiscal year’s product sales (fiscal 2010) included approximately $809,000 in sales from the now divested
OEM medical device product lines. Discounting such sales, our revenues grew 3.4% (approximately $101,000) primarily in
our T-HEXX Animal Health division (Dragonhyde Hoof Bath Concentrates sales) in Europe. We
look to continue to our growth by expanding our footprint in the Animal Health Division through sales and marketing (additional
sales representatives, tradeshows, etc), new product launches (Dragonhyde PUTTY, new barrier dips) and distribution agreements.
There is also a continual conversion of existing Contract coating service customers into a polymer [product] sales customer based
upon our equipment sales and/or pilot program validation (customer’s establishment of their market and ability to coat themselves).
Accordingly, we anticipate a gradual reduction to our services income with an offsetting increase in polymer sales for our [human]
medical division. One
of our technologies, through one of our customers, is under FDA review. We expect a major increase
to our license royalties and contract payments revenues once that is finalized, which would be is about a year or two.  Total Expenses
for the year ended June 30, 2011 were $6,096,313, an improvement of 9.8% or $663,543 lower than the 2010 fiscal year results of
$6,759,856. Cost
of Goods Sold was $1,590,776 for fiscal 2011 as compared to $2,405,023 for fiscal 2010. Operating Expenses were $4,626,341 and
$4,978,695, for the years ended June 30, 2011 and 2010, respectively. Other Expenses added $206,258 to expenses for fiscal 2011
as compared with $173,405 for fiscal 2010. There was an Income Tax Benefit of $327,062 for fiscal 2011 and $461,638 for fiscal
2010. Reducing expenses in fiscal 2010 was a one time Gain from Sale of Assets of $335,629. Management
Comment: The exit from the higher cost OEM medical device business (the remainder of the OEM business was sold in November
2009 with a transitional sales period until April 2010) resulted in lower product sales and hence, lower material costs for fiscal
2011.  There was also the applicable labor, outside sterilization costs and support costs [personnel] which are no longer
present for fiscal 2011 and beyond (some of the support costs carried into fiscal 2011 before being enacted upon).  We are
now a more streamlined organization: we had 72 employees prior to the sale of product lines in fiscal 2009 & 2010, compared
with 43 at this year end. Excluding
the direct costs of the activity of the sold product lines and its after-tax gain from the sale, our fiscal 2010 Total Expenses
would have been $6,404,375 (or with the current fiscal year $308,062 or 4.8% better). The Cost of Goods for fiscal 2010 when excluding
the sold medical product lines would have approximated $1,586,000 or about that of fiscal 2011 despite having approximately $101,000
more in product sales this fiscal year, reflecting the higher cost of the divested line. The overall improvement to Operating
Expenses ($4,626,341 vs. $4,978,695, for the years ended June 30, 2011 and 2010, respectively or an improvement of $352,354),
was primarily related with personnel reductions available following the divestiture. A lower pre-tax loss reduced the Income Tax
Benefit for fiscal 2011 ($327,062 as compared with $461,638 for fiscal 2010; with fiscal 2010 including the netting of the income
taxes due from the sale of the product lines). Among
all of this activity, we continue our “re-investment”: Research & Development expenditures (primarily salaries
and benefits) and funding to the patent and trademark estate, the costs of which are included in the Company’s Operating
Expenses. Although these costs translate to minimal value in the current period, they more provide for future results, for example
from new product development to the protection of such, accordingly they are regarded as “re-investment” costs. These
expenditures represented 18.5% and 21.6% of total Operating Expenses (or $855,398 and $1,075,175) for the years ended June 30,
2011 and 2010, respectively.  A Net Loss
of $581,298 ($0.12 per share) is reported for the 2011 fiscal year compared with a Net Loss of $559,352 ($0.12 per share) for
the 2010 fiscal year. Management
Comment: The Company is still reeling in from the cancellation and subsequent replacement of a significant Supply and Support
Agreement (effective January 1, 2009) that reduced revenues and cash by $780,000 annually. The Company though expects its new
products and focus in its Animal Health division to carry the Company back into profitability, and that the timing would be soon.  Liquidity
and Capital Resources Working
Capital as of June 30, 2011 was $1,196,607 compared against $1,961,322 the prior year or lower by $764,715. Compared
against June 30, 2010, the June 30, 2011 cash and cash equivalent balance was lower by $341,013, short-term investments lower
by $390,000, accounts receivable lower by $145,499, inventory and the current portion of deferred tax asset higher by $196,035
and $122,100, respectively and current liabilities higher by $186,301. Management
Comment: Cash Used in Operating Activities was $378,006 and the cash used for property and equipment and intangibles (the
patent estate and trademarks) totaled $301,708. Included in the cash used was $855,398 as “re-investment” costs (R&D
and patent and trademark costs) that yields more future benefits than for the current period. The Companyexpects growth
from it’s T-HEXX Animal Health business alone to be sufficient to return the Company back into profitability and that it
would be in the very near future.  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, 2011,” 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, 2011. 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, 2011, 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: ·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. ·Reporting Controls over Inventory (control deficiency) The
Company lacks a perpetual inventory system to adequately account for inventory transactions and to report inventory. Full physical
inventory counts are conducted at year-end allowing for any misstatement to be inconsequential.  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 2011 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 two Form 8-K’s during the year ended June 30, 2011: one reporting the naming of its Dragonhyde®
Hoof Bath Concentrate as a 2011 World Ag Expo Top Ten New Product and the other reporting the Proxy Ballot results from the December
1, 2010 Annual Meeting of Shareholders.  
 
 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.     |  |  |  |  |                          |  |  | 
|17-Aug-11                               |  |  |  |  | 17-Aug-11                |  |  | 

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.     |  |  |  |  |                       |  |  | 
|17-Aug-11                               |  |  |  |  | 17-Aug-11             |  |  | 
|                                        |  |  |  |  |                       |  |  | 
|                                        |  |  |  |  |                       |  |  | 
|/s/ Robert H. Bea                       |  |  |  |  | /s/ Maxwell Borow     |  |  | 
|Robert H. Bea                           |  |  |  |  | Maxwell Borow         |  |  | 
|Director                                |  |  |  |  | Director              |  |  | 
|                                        |  |  |  |  |                       |  |  | 
|17-Aug-11                               |  |  |  |  |                       |  |  | 
|                                        |  |  |  |  |                       |  |  | 
|                                        |  |  |  |  |                       |  |  | 
|/s/ Dieter Heinemann                    |  |  |  |  | /s/ Frederick L. Perl |  |  | 
|Dieter Heinemann                        |  |  |  |  | Frederick L. Perl     |  |  | 
|Director                                |  |  |  |  | Director              |  |  | 
|                                        |  |  |  |  |                       |  |  | 
|17-Aug-11                               |  |  |  |  | 17-Aug-11             |  |  | 
|                                        |  |  |  |  |                       |  |  | 
|                                        |  |  |  |  |                       |  |  | 
|/s/ Michael F. Ryan                     |  |  |  |  | /s/ George A. Ziets   |  |  | 
|Michael F. Ryan                         |  |  |  |  | George A. Ziets       |  |  | 
|Director                                |  |  |  |  | Director              |  |  | 
|                                        |  |  |  |  |                       |  |  | 
|17-Aug-11                               |  |  |  |  | 17-Aug-11             |  |  | 

INDEX
TO 2011 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.  
 
 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; andb.    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:
October 13, 2011    By: /s/ Manfred F. DyckManfred F. DyckChairman and Chief Executive Officer 
 
 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; andb.    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:
October 13, 2011    By: /s/ Robert Y. LeeRobert Y. LeeVice President, Chief Financial Officer 
 
  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, 2011 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:
October 13, 2011	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, 2011 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: October 13, 2011
	By: /s/ Robert Y. lee Robert Y. Lee Vice President, Chief
Financial Officer























Hydromer,
Inc. & Subsidiary



Consolidated
Financial Statements



June 30, 2011
and 2010















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, 2011 and 2010 and the related statements of
operations, stockholders’ equity and cash flows for each of the years in the two year period ended June 30, 2011. 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, 2011 and 2010, and the results of its operations and its cash flows for each of the years in the
two-year period ended June 30, 2011 in conformity with accounting principles generally accepted in the United States of America.





/s/ Rosenberg Rich Baker Berman &
Company





Somerset, New
Jersey

October 13,
2011





Hydromer,
Inc. & Subsidiary

Index to the
Consolidated Financial Statements

June 30, 2011
and 2010













Page: Financial
Statements



F-1:
Consolidated Balance Sheets



F-2: Consolidated Statements of Operations



F-2: Consolidated Statements of Stockholders’ Equity



F-3: Consolidated Statements of Cash Flows



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















Hydromer,
Inc. & Subsidiary

Consolidated
Balance Sheets



|                                                                                                                                                                           | June 30, |            
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------- | -----------
|.                                                                                                                                                                          | 2011     | 2010       
|Assets                                                                                                                                                                     |          |            
|Current Assets:                                                                                                                                                            |          |            
|Cash
    and cash equivalents                                                                                                                                              | $        | 502,597    
|Short-term
    investments                                                                                                                                                 |          | 50,000     
|Trade receivables
    less allowance for doubtful accounts of $5,622 and       $33,276 as of June 30, 2011 and 2010, respectively                                          |          | 774,753    
|Inventory                                                                                                                                                                  |          | 444,604    
|Prepaid
    expenses                                                                                                                                                       |          | 209,241    
|Deferred
    tax asset                                                                                                                                                     |          | 122,100    
|Other                                                                                                                                                                      |          | 13,547.    
|Total Current Assets                                                                                                                                                       |          | 2,116,842  
|                                                                                                                                                                           |          |            
|Property
    and equipment, net                                                                                                                                            |          | 2,863,912  
|Deferred
    tax asset, non-current                                                                                                                                        |          | 1,196,704  
|Intangible
    Assets, net                                                                                                                                                 |          | 820,231    
|Total Assets                                                                                                                                                               | $        | 6,997,689  
|                                                                                                                                                                           |          |            
|Liabilities
    and Stockholders’ Equity                                                                                                                                   |          |            
|Current Liabilities:                                                                                                                                                       |          |            
|Accounts
    payable                                                                                                                                                       | $        | 387,094    
|Accrued
    expenses                                                                                                                                                       |          | 313,626    
|Current
    portion of capital leases                                                                                                                                      |          | 18,687     
|Current
    portion of deferred revenue                                                                                                                                    |          | 149,108    
|Current
    portion of mortgage payable                                                                                                                                    |          | 51,720     
|                                                                                                                                                                          
|Total Current Liabilities                                                                                                                                                  |          | 920,235    
|                                                                                                                                                                           |          |            
|Deferred tax liability                                                                                                                                                     |          | 294,012    
|Long-term portion
    of capital leases                                                                                                                                    |          | 15,398     
|Long-term portion
    of deferred revenue                                                                                                                                  |          | 120,940    
|Long-term
    portion of mortgage payable                                                                                                                                  |          | 2,714,817  
|Total Liabilities                                                                                                                                                          |          | 4,065,402  
|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, 2011 and 2010 |          | 3,721,815  
|Contributed
    capital                                                                                                                                                    |          | 633,150    
|Accumulated
    deficit                                                                                                                                                    |          | (1,416,538)
|Treasury
    stock, 10,917 common shares at cost                                                                                                                           |          | (6,140)    
|Total
    Stockholders’ Equity                                                                                                                                             |          | 2,932,287  
|Total
    Liabilities and Stockholders’ Equity                                                                                                                             | $        | 6,997,689  
|                                                                                                                                                                           |          |            

See notes to the consolidated financial
statements.





F-1






Hydromer,
Inc. & Subsidiary

Consolidated
Statements of Operations

|                                                         |   |                            
|-------------------------------------------------------- | - | ---------------------------
|                                                         |   | Year
        Ended June 30,
|                                                         |   | 2011                       
|Revenues                                                 |   |                            
|Sale of products                                         | $ | 3,105,959                  
|Service revenues                                         |   | 1,442,107                  
|Royalties
    and Contract Revenues                      |   | 966,949                    
|Total
    Revenues                                       |   | 5,515,015                  
|Expenses                                                 |   |                            
|Cost of Sales                                            |   | 1,590,776                  
|Operating Expenses                                       |   | 4,626,341                  
|Other Expenses, net                                      |   | 206,258                    
|Gain from Sale of Assets                                 |   | -                          
|Benefit from Income Taxes                                |   | (327,062)                  
|Total
    Expenses                                       |   | 6,096,313                  
|Net
    Loss                                             | $ | (581,298)                  
|(Loss) Per Common
    Share                              | $ | (0.12)                     
|Weighted Average Number
    of Common Shares Outstanding |   | 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.







Hydromer,
Inc. & Subsidiary

Consolidated
Statements of Stockholders’ Equity

|                          |                  |   |             |   |             |   |                    |  |        |  
|------------------------- | ---------------- | - | ----------- | - | ----------- | - | ------------------ |  | ------ | -
|                          | Common
    Stock |   | Contributed |   | Accumulated |   | Treasury
    Stock |  |        |  
|                          | Shares           |   | Amount      |   | Capital     |   | Deficit            |  | Shares |  
|Balance June 30, 2009     | 4,783,235        | $ | 3,721,815   | $ | 633,150     | $ | (275,888)          |  | 10,917 | $
|Net Loss                  |                  |   |             |   |             |   | (559,352)          |  |        |  
|Balance
    June 30, 2010 | 4,783,235        | $ | 3,721,815   | $ | 633,150     | $ | (835,240)          |  | 10,917 | $
|Net Loss                  |                  |   |             |   |             |   | (581,298)          |  |        |  
|Balance
    June 30, 2011 | 4,783,235        | $ | 3,721,815   | $ | 633,150     | $ | (1,416,538)        |  | 10,917 | $
|                          |                  |   |             |   |             |   |                    |  |        |  
|                          |                  |   |             |   |             |   |                    |  |        |  

See notes to the consolidated financial
statements.







F-2





Hydromer,
Inc. & Subsidiary

Consolidated
Statements of Cash Flows



|                                                                                |   | Year
        Ended June 30,
|------------------------------------------------------------------------------- | - | ---------------------------
|                                                                                |   | 2011                       
|Cash
    Flows From Operating Activities:                                       |   |                            
|Net
    Loss                                                                    | $ | (581,298)                  
|Adjustments
    to reconcile net loss to net cash used in operating activities: |   |                            
|Gain
    from the sale of product lines                                         |   | -                          
|Depreciation
    and amortization                                               |   | 431,793                    
|Deferred
    income taxes                                                       |   | (331,222)                  
|Changes
    in Assets and Liabilities                                           |   |                            
|Trade receivables                                                               |   | 145,499                    
|Inventory                                                                       |   | (196,035)                  
|Prepaid expenses                                                                |   | 16,794                     
|Other assets                                                                    |   | 641                        
|Accounts payable and accrued liabilities                                        |   | 107,415                    
|Deferred revenues                                                               |   | 28,407                     
|Income taxes payable                                                            |   | -                          
|Net
    Cash Used in Operating Activities                                       |   | (378,006)                  
|Cash
    Flows From Investing Activities:                                       |   |                            
|Cash
    purchases of property and equipment                                    |   | (123,356)                  
|Cash
    payments on Patents and Trademarks                                     |   | (178,352)                  
|Sale
    of Product Lines                                                       |   | -.                         
|Cash
    purchases of short-term investments                                    |   | (50,000)                   
|Maturity
    of short-term investments                                          |   | 440,000                    
|Net
    Cash Provided by Investing Activities                                   |   | 88,292                     
|Cash
    Flows From Financing Activities:                                       |   |                            
|Repayment of long-term borrowings                                               |   | (51,299)                   
|Net Cash Used in Financing Activities                                           |   | (51,299)                   
|                                                                                |   |                            
|Net
    Decrease in Cash and Cash Equivalents:                                  |   | (341,013)                  
|Cash
    and Cash Equivalents at Beginning of Period                            |   | 843,610                    
|Cash
    and Cash Equivalents at End of Period                                  | $ | 502,597                    



|Cash paid during the year for: |   |         |   |        
|------------------------------ | - | ------- | - | -------
|Interest                       | $ | 197,210 | $ | 202,411
|Income taxes                   | $ | 4,160   | $ | 77,080 



See notes
to the consolidated financial statements





F-3









Notes To
Consolidated Financial Statements









1. SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES

Nature of Operations

Hydromer,
Inc. & Subsidiary (the Company) is a 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 also offers R&D, engineering and contract coating services (through its wholly
owned subsidiary, Biosearch Medical Products, Inc. (Biosearch)) in its array of capabilities. The Company obtains
patent rights on certain products from which royalty revenues can be received. Biosearch, a U.S. based corporation, was also previously
a medical device manufacturer for various medical products companies. During the 2010 fiscal year, the Company sold off the remaining
part of its OEM medical device business (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, 2011 was $50,000, comprising of a bank CD with an interest rate
of 0.345%. Short term investments as of June 30, 2010 were $440,000.

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

Accounting
Standards Codification (“ASC”) 820-10, Fair Value Measurements, 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:


Level 1 - Quoted prices in active markets for identical assets or liabilities.


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.


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

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 $110,745 and $47,340 for the years ended June 30, 2011 and 2010, respectively.



F-4







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, 2011 and 2010 were $654,952 and $837,351, 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, 2011 and June 30, 2010.

Foreign Currency Translation

The
Companys functional currency is the United States Dollar. The Company accounts for foreign currency translation pursuant
to Financial Accounting Standards Board (FASB) ASC 830-20, Foreign Currency Transactions.   All assets
and liabilities are translated into United States dollars using the rates prevailing at the end of the period.  Revenues
and expenses are translated using the average exchange rates prevailing throughout the period.  Unrealized foreign exchange
amounts resulting from translations at different rates according to their nature are included in accumulated other comprehensive
income or loss.  Recognized foreign currency transaction gains and losses are recognized in the operations.

Comprehensive Income (Loss)

The
Company applies the provisions of FASBs ASC 220-10, Reporting Comprehensive Income. in which unrealized gains
and losses from foreign exchange translations are reported in the consolidated statements of shareholders deficit as comprehensive
income (loss).

As
of June 30, 2011, there was no comprehensive income (loss).

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 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.

Reclassification

Certain
amounts previously reported may have been reclassified to conform to the 2011 presentation.





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.

There
were no significant customers for the years ended June 30, 2010 and 2011.





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, 2011 and June 30, 2010, respectively:

|as of June 30, 2011   | Level
    1 | Level
    2 | Level
    3 | Total   
|--------------------- | ----------- | ----------- | ----------- | --------
|Assets                |             |             |             |         
|Investments           | $ 50,000    | -           | -           | $ 50,000
|Total
    Assets      | $ 50,000    | -           | -           | $ 50,000
|                      |             |             |             |         
|Liabilities
    - n/a | -           | -           | -           | -       



|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 | -           | -           | -           | -        

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

Inventory
consists of:

|                    |   | June
    30, |  
|------------------- | - | ------------ | -
|                    |   | 2011         |  
|Finished
    goods  | $ | 197,389      | $
|Work
    in process |   | 32,116       |  
|Raw
    materials   |   | 215,099      |  
|                    | $ | 444,604      | $
|                    |   |              |  







F-5







5. PROPERTY AND EQUIPMENT

Property
and equipment consists of the following:

|                                                   |   | June
    30, |  
|-------------------------------------------------- | - | ------------ | -
|                                                   |   | 2011         |  
|Land                                               | $ | 472,410      | $
|Building                                           |   | 2,323,016    |  
|Machinery
    and equipment                        |   | 2,250,263    |  
|Equipment
    under capital leases                 |   | 86,729       |  
|Furniture
    and fixtures                         |   | 209,818      |  
|                                                   |   | 5,342,236    |  
|Less:
    Accumulate depreciation and amortization |   | (2,441,596)  |  
|Accumulated depreciation on capital leases         |   | (36,728)     |  
|Property
    and Equipment, net                    | $ | 2,863,912    | $
|                                                   |   |              |  

Depreciation
expense, including that on assets under capitalized leases, charged to operations, was $231,347 and $225,051 for the years ended
June 30, 2011 and 2010, respectively. During the year ended June 30, 2010, $1,743,800 in fully depreciated equipment and fixtures
were written-off and 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 of $82,434 and $83,495 as of June 30, 2011 and 2010, respectively,
are comprised of the following:

|                                |   | June
    30, |  
|------------------------------- | - | ------------ | -
|                                |   | 2011         |  
|Patents                         | $ | 1,440,365    | $
|Trademarks                      |   | 103,383      |  
|Less:  Accumulated amortization |   | (641,083)    |  
|Intangible
    Assets, net      | $ | 902,665      | $
|                                |   |              |  
|                                |   |              |  

Future amortization of Intangible
Assets, as of June 30, 2011, are as follows:

|Year ending June 30, |   |         | 
|-------------------- | - | ------- | 
|2012                 | $ | 156,276 | 
|2013                 |   | 103,209 | 
|2014                 |   | 96,600  | 
|2015                 |   | 94,051  | 
|2016                 |   | 89,773  | 
|Thereafter           |   | 362,756 | 
|                     | $ | 902,665 | 
|                     |   |         | 

Amortization
expense for the years ended June 30, 2011 and 2010 were $200,446 and $205,937, 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 $3,667 in finance charges, are as follows:

|Year
    ending June 30, |   |        | 
|------------------------ | - | ------ | 
|2012                     | $ | 20,506 | 
|2013                     |   | 17,246 | 
|                         | $ | 37,752 | 
|                         |   |        | 















8. LONG-TERM DEBT

As
of June 30, 2011, the Company’s facility is 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, 2011, the book value of the real estate and improvements was $2,224,061.

As
a result of the net losses for the years ended June 30, 2010 and June 30, 2011, the Company did not meet certain financial
covenants required under the loan document. Loan modifications and covenant waivers were issued by the lender during each
year. On October 13, 2011, the Company and the bank entered into a loan modification agreement pursuant to which the bank
waived the June 30, 2011 covenants and defaults in exchange for the Company providing its accounts receivable and inventory
as collateral.Although waivers/modifications were
granted by the lender, there is no certainty that future waivers/modifications would be granted.



Long-term debt
is comprised of the following:

|                                                     |   | June
    30, |  
|---------------------------------------------------- | - | ------------ | -
|                                                     |   | 2011         |  
|Mortgage
    note                                    | $ | 2,766,537    | $
|Less:  Current Maturities                            |   | (51,720)     |  
|Long-term
    Debt,        Net of Current Maturities | $ | 2,714,817    | $
|                                                     |   |              |  
|                                                     |   |              |  

Maturities of the long-term
debt are as follows:

|Year
    ending June 30, |   | As
    of June 30, 20111 | 
|------------------------ | - | ------------------------ | 
|2012                     | $ | 51,720                   | 
|2013                     |   | 55,899                   | 
|2014                     |   | 59,847                   | 
|2015                     |   | 64,074                   | 
|2016                     |   | 68,119                   | 
|Thereafter               |   | 2,466,878                | 
|                         | $ | 2,766,537                | 
|                         |   |                          | 
|                         |   |                          | 



9. INCOME
TAXES

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

|                             |   | Federal   |   | State     |   | Total     | 
|---------------------------- | - | --------- | - | --------- | - | --------- | 
|Year
    Ended June 30, 2011 |   |           |   |           |   |           | 
|Current                      | $ | -         | $ | 4,160     | $ | 4,160     | 
|Deferred                     |   | (314,045) |   | (17,177)  |   | (331,222) | 
|                             | $ | (314,045) | $ | (13,017)  | $ | (327,062) | 
|Year
    Ended June 30, 2010 |   |           |   |           |   |           | 
|Current                      | $ | -         | $ | 4,160     | $ | 4,160     | 
|Deferred                     |   | (355,096) |   | (110,702) |   | (465,798) | 
|                             | $ | (355,096) | $ | (106,542) | $ | (461,638) | 
|                             |   |           |   |           |   |           | 
|                             |   |           |   |           |   |           | 

The Company’s
deferred tax asset and liability as presented in the Company’s financial statements are comprised of the following:

|                               |   | June
    30, |  
|------------------------------ | - | ------------ | -
|                               |   | 2011         |  
|Deferred
    Tax Asset         |   |              |  
|Net Operating Losses           | $ | 891,783      | $
|Adjustment of Goodwill         |   | 196,069      |  
|Research & Development Credits |   | 618,302      |  
|Valuation Allowance            |   | (387,350)    |  
|Total Deferred Tax Assets      |   | 1,318,804    |  
|                               |   |              |  
|Deferred
    Tax Liability     |   |              |  
|Depreciation                   |   | (294,012)    |  
|Total Deferred Tax Liability   | $ | (294,012)    | $
|                               |   |              |  
|                               |   |              |  





F-6







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, 2011, the Company has net operating loss carry forwards of approximately $1,982,512 and $3,249,692 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, 2031 and June 30, 2018 for Federal and State
tax purposes, respectively. In addition, the Company has Research and Development Tax Credits of approximately $368,490 and $249,812
for Federal and State tax purposes, respectively, which expire in various years through June 30, 2031 and June 30, 2018, 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, |       
|----------------------------------------------------- | ------------ | ------
|                                                      | 2011         |       
|Federal statutory tax rate                            |              | (34.0)
|State income tax - net of
        federal tax benefit |              | (5.2) 
|R
    & D credits                                     |              | (2.3) 
|Adjustment
    in valuation allowances                |              | 8.3   
|Permanent
    and other differences                   |              | (2.8) 
|                                                      |              | (36.0)
|                                                      |              |       
|                                                      |              |       



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.

Open
options under this plan awarded to the Board of Directors are as follows:

|Issuance
        Date | Options Issued | Exercise Price | Expiration Date  | Options Exercised
|--------------------- | -------------- | -------------- | ---------------- | -----------------
|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 stock option issuances during the 2010 or 2011 fiscal years.

A
summary of activity under the plan for the years ending June 30, 2010 and 2011 are as follows:

|                       |  |                      |        |                    |  | Common
     Stock Options Outstanding | 
|---------------------- |  | -------------------- | ------ | ------------------ |  | ------------------------------------- | 
|                       |  | Weighted
    Average |        |                   
|                       |  |                      | Shares | Exercise
    Price | 
|Balance, June 30, 2009 |  | 183,000              |        | $
      1.53       | 
|Cancelled              |  | (56,000)             |        | 2.10               | 
|Balance, June 30, 2010 |  | 127,000              |        | $
      1.28       | 
|Cancelled              |  | (62,000)             |        | 0.95               | 
|Balance, June 30, 2011 |  | 65,000               |        | $
      1.60       | 
|                       |  |                      |        |                    |  |                                       | 

Following is a summary of the status
of options outstanding as of June 30, 2011:

|Outstanding Options. |  | Exercisable Options.
|-------------------- |  | --------------------
|ExercisePriceRange   |  | Number              
|$1.18                |  | 50,000              
|$3.00                |  | 15,000              
|                     |  | 65,000              
|                     |  |                     

As the stock
price of the Company’s stock on June 30, 2011 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 contributions made to the plan during the fiscal years ended June 30, 2010 or June 30, 2011.















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®, Aquatrix®, Dermaseal®, Dragonhyde®,
Hydromer® Anti-Fog/Condensation Control Coatings, Hydromer® Lubricious Coatings, Sea-Slide®and T-HEXX® 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 biofeedback devices, all the medical device product lines were sold in fiscal 2009 and 2010. Also remaining
in this segment are contract coating services and engineering equipment sales and 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 2010 and 2011 fiscal years. For the medical
products segment, the top three customers accounted for 51% and 87% of that segment’s 2011 and 2010 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.





F-7







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
    Research |   | Medical
      Products |   | Corporate
    Overhead |   | Total      
|--------------------------------------- | - | -------------------- | - | ---------------------- | - | ---------------------- | - | -----------
|Year
    Ended June 30, 2011            |   |                      |   |                        |   |                        |   |            
|Revenue                                 | $ | 4,225,184            | $ | 1,289,831              |   |                        | $ | 5,515,015  
|Expenses                                |   | (3,627,262)          |   | (1,171,504)            | $ | (1,624,609)            |   | (6,423,375)
|Earnings
    (Loss) before Income Taxes | $ | 597,922              | $ | 118,327                | $ | (1,624,609)            | $ | (908,360)  
|                                        |   |                      |   |                        |   |                        |   |            
|Year
    Ended June 30, 2010            |   |                      |   |                        |   |                        |   |            
|Revenue                                 | $ | 4,136,010            | $ | 2,064,494              |   |                        | $ | 6,200,504  
|Expenses                                |   | (3,738,588)          |   | (1,813,998)            | $ | (1,668,908)            |   | (7,221,494)
|Earnings
    (Loss) before Income Taxes | $ | 397,422              | $ | 250,496                | $ | (1,668,908)            | $ | (1,020,990)
|                                        |   |                      |   |                        |   |                        |   |            
|                                        |   |                      |   |                        |   |                        |   |            

Included
under the Medical Products segment was the pre-tax gain from the sale of product lines of $335,629 in fiscal 2010.



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



|          | 2011 | 2010
|--------- | ---- | ----
|Domestic: | 60%  | 72% 
|Foreign:  | 40%  | 28% 









13. EARNINGS
PER SHARE

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

|                                                                                                                                                   |   | 2011      |   | 2010     
|-------------------------------------------------------------------------------------------------------------------------------------------------- | - | --------- | - | ---------
|Numerator:                                                                                                                                         |   |           |   |          
|Net loss                                                                                                                                           | $ | (581,298) | $ | (559,352)
|Denominator:                                                                                                                                       |   |           |   |          
|Denominator
        for basic earnings per share
        - weighted
        average shares outstanding                                             |   | 4,772,318 |   | 4,772,318
|                                                                                                                                                   |   |           |   |          
|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 per share                                                                                                                           | $ | (0.12)    | $ | (0.12)   
|Dilutive
    Earnings per share                                                                                                                    |   | n/a       | $ | n/a      
|                                                                                                                                                   |   |           |   |          
|                                                                                                                                                   |   |           |   |          

Common
stock equivalents (consisting of 65,000 and 127,000 stock options for the years ended June 30, 2011 and 2010, 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® 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.

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, this transactions did not meet the criteria
of discontinued operations under ASC 205-20, Discontinued Operations.

The
gain 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-8













INDEX
TO EXHIBITS

3.a
Certificate of Incorporation of the Company, as amended to date

3.b
By-Laws of the Company, as amended to date

10.a
Minutes of Meeting of the Board of Directors of the Company held on March 5, 1981 with respect to stock options granted to Manfred
F. Dyck (Incorporated by reference to Exhibit 10.i to the Registration Statement).

10.b
Agreement dated August 11, 1981 between Horizon Concepts, Inc., and the Company (Incorporated by reference to Exhibit 10.c to
the Registration Statement).

10.c
Agreement dated January 27, 1982 between Reliable Pharmaceutical Company, Inc. and the Company (Incorporated by reference to Exhibit
10.d to the Registration Statement).

10.d
License Agreement dated July 14, 1982 between Biosearch Medical Products Inc. and the Company (Incorporated by reference to Exhibit
10.g to the Registration Statement).

10.e
Management Services Agreement dated July 14, 1982 between Biosearch Medical Products Inc. and the Company (Incorporated by reference
to Exhibit 10.h to the Registration Statement).

10.f
Amendment dated October 7, 1982 to Agreement dated January 27, 1982 between Reliable Pharmaceutical Company, Inc. and the Company,
together with letter dated October 14, 1982 from Reliable Pharmaceutical Company, Inc. to the Company (Incorporated by reference
to Exhibit 10.f to the 1983 Annual Report).

10.g
Hydromer Coating agreement dated February 11, 1983 between Pacesetter Systems, Inc. and the Company (Incorporated by reference
to Exhibit 10.g to the 1983 Annual Report).

10.h
Lease Agreement dated April 5, 1983 between Salem Realty and the Company (Incorporated by reference to Exhibit 10.h to the 1983
Annual Report).

10.i
License Agreement dated April 25, 1983 between CardioSearch Inc. and the Company (Incorporated by reference to Exhibit 10.i to
the 1983 Annual Report).

10.j
Trademark License Agreement dated April 25, 1983 between CardioSearch Inc. and the Company (Incorporated by reference to Exhibit
10.j to the 1983 Annual Report).

10.k
Agreement dated August 31, 1983 between Becton, Dickinson & Company and the Company (Incorporated by reference to Exhibit
10.l to the 1983 Annual Report).





10.l
Current Report on Form 8-K filed May 30, 1986

10.m
Hydromer Coating License Agreement dated September 30, 1984 between Axiom Medical, Inc. and the Company (Incorporated by reference
to Exhibit 10.m to the 1984 Annual Report).

10.n
1982 Stock Option Plan of the Company (Incorporated by reference to Exhibit 10.m to the 1983 Annual Report).

10.o
Amendment dated June 26, 1984 to Agreement dated August 3, 1983 between Becton, Dickinson & Company and the Company (Incorporated
by reference to Exhibit 10.o to the 1984 Annual Report).

10.p
License Agreement dated July 31, 1984 between Kendall Company and the Company (Incorporated by reference to Exhibit 10.p to the
1984 Annual Report).

10.q
License Agreement dated March 1, 1985 between Van-Tec Inc. and the Company and Letter of Amendment thereto dated June 13, 1985
(Incorporated by reference to Exhibit 10.o to the 1985 Annual Report).

10.r
Telex dated June 24, 1985 terminating License Agreement with CardioSearch Inc. (Incorporated by reference to Exhibit 10.p to the
1984 Annual Report).

10.s
Amendment dated as of December 31, 1984 to Management Services Agreement dated July 14, 1982 between Biosearch Medical Products
Inc. and the Company (Incorporated by reference to Exhibit 10.q to the 1985 Annual Report).

10.t
Lease Renewal Agreement dated April 15, 1985 between Salem Realty and the Company (Incorporated by reference to Exhibit 10.r to
the 1985 Annual Report).

10.u
Lease Agreement dated December 4, 1984 between Biosearch Medical Products Inc. and the Company (Incorporated by reference to Exhibit
10.s to the 1985 Annual Report).

10.v
License Agreement dated April 11, 1986 between Axiom Medical, Inc. and the Company (Incorporated by reference to Exhibit 10.i
to the 1986 Annual Report).

10.w
License Agreement dated September 13, 1985 between U. S. Viggo and the Company (Incorporated by reference to Exhibit 10.c to the
1986 Annual Report).

10.x
License Agreement dated March 27, 1986 between Wilkinson Sword Limited and the Company (Incorporated by reference to Exhibit 10.f
of the 1986 Annual Report).

10.y
Lease Renewal Agreement dated April 15, 1987 between Salem Realty and the Company (Incorporated by reference to Exhibit 10.y to
the 1987 Annual Report).

10.z
License Agreement dated April 30, 1986 between HPK International and the Company (Incorporated by reference to Exhibit 10.j to
the 1986 Annual Report).

10.aa
License Agreement dated August 1, 1986 between Film Specialties, Inc. and the Company (Incorporated by reference to Exhibit 10.aa
to the 1987 Annual Report).

10.ab
Lease Renewal Agreement dated April 15, 1988 between Salem Realty and the Company (Incorporated by reference to Exhibit 10.ab
to the 1988 Annual Report).

10.ac
License Agreement dated June 30, 1987 between Richards Medical Company and the Company (Incorporated by reference to Exhibit 10.ac
to the 1988 Annual Report).

10.ad
License Agreement dated December 1, 1987 between Mallinckrodt, Inc. and the Company (Incorporated by reference to Exhibit 10.ad
to the 1988 Annual Report).

10.ae
Option Agreement dated January 28, 1988 between Cordis Corporation and the Company (Incorporated by reference to Exhibit 10.ae
to the 1988 Annual Report).

10.af
Lease Agreement dated April 15, 1988 between Biosearch Medical Products Inc. and the Company (Incorporated by reference to Exhibit
10.ag of the 1988 Annual Report).

10.ag
Letters dated June 11, 1987 and September 22, 1987 to U. S. Viggo, Inc. modifying License Agreement dated September 13, 1985,
to cover only central venous catheters (Incorporated by reference to Exhibit 10.ag to the 1988 Annual Report).

10.ah
Lease Renewal Agreement dated April 15, 1989 between Salem Realty and the Company (Incorporated by reference to Exhibit 10.ah
to the 1989 Annual Report).

10.ai
Amendment dated October 1, 1988 to License Agreement dated September 13, 1985, between U. S. Viggo and the Company (Incorporated
by reference to Exhibit 10.ai to the 1989 Annual Report).

10.aj
License Agreement dated October 20, 1988 between Cordis Corp. and the Company (Incorporated by reference to Exhibit 10.aj to the
1989 Annual Report).

10.ak
License Agreement dated March 31, 1989 between Cathlab Corp. and the Company (Incorporated by reference to Exhibit 10.ak to the
1989 Annual Report).

10.al
Amendment dated December 1, 1988 to License Agreement dated August 1, 1986 between Film Specialties, Inc. and the Company (Incorporated
by reference to Exhibit 10.al to the 1989 Annual Report).

10.am
Finders Agreement dated August 20, 1987 between Phoenix Chemical, Inc. and the Company (Incorporated by reference to Exhibit 10.am
to the 1989 Annual Report).

10.an
License Agreement dated September 10, 1989 between the Stent Division of Schneider and the Company (Incorporated by reference
to Exhibit 10.an to the 1990 Annual Report).

10.ao
License Agreement dated March 30, 1990 between Cosmo Ikko Company and the Company (Incorporated by reference to Exhibit 10.ao
to the 1990 Annual Report).

10.ap
License Agreement dated April 12, 1990 between Interventional Therapeutics, Inc. and the Company and amendment dated May 7, 1990
to the Agreement dated April 12, 1990 between Interventional Therapeutics, Inc. and the Company (Incorporated by reference to
Exhibit 10.ap to the 1990 Annual Report).

10.aq
Amended License Agreement dated January 1, 1990 between the Wilkinson Sword group of companies and the Company (Incorporated by
reference to Exhibit 10.aq the 1990 Annual Report).

10.ar
Lease Agreement dated April 15, 1990 between Salem Realty and the Company (Incorporated by reference to Exhibit 10.ar to the 1990
Annual Report).

10.as
Amendment to the Agreement dated July 31, 1984 between Kendall Company and the Company (Incorporated by reference to Exhibit 10.as
to the 1990 Annual Report).

10.at
License Agreement dated January 11, 1991 between Biosearch Medical Products Inc. and the Company (Incorporated by reference to
Exhibit 10.at to the 1991 Annual Report).

10.au
License Agreement dated May 16, 1991 between I E Sensors and the Company (Incorporated by reference to Exhibit 10.au to the 1991
Annual Report).

10.av
Lease Renewal Agreement dated April 15, 1991 between Salem Realty and The Company (Incorporated by reference to Exhibit 10.av
to the 1991 Annual Report).

10.aw
License Agreement dated July 25, 1991 between Johnson & Johnson Orthopaedics and the Company (Incorporated by reference to
Exhibit 10.aw to the 1992 Annual Report).



10.ax
License Agreement dated August 19, 1991 between Navarre Laboratories Ltd. and the Company (Incorporated by reference to Exhibit
10.ax to the 1992 Annual Report).

10.ay
Amended License Agreement dated September 15, 1991 between Boston Scientific Corp. and the Company (Incorporated by reference
to Exhibit 10.ay to the 1992 Annual Report).

10.az
Option/License Agreement dated September 23,1991 between Elan Corp. PLC and the Company (Incorporated by reference to Exhibit
10.az to the 1992 Annual Report).

10.ba
Lease Agreement dated November 1, 1991 between Morton Street Realty and the Company (Incorporated by reference to Exhibit 10.ba
to the 1992 Annual Report).

10.bb
License Agreement dated August 17, 1992 between SCIMED Peripheral Interventions, division of SCIMED Life Systems, Inc. and the
Company. (Incorporated by reference to Exhibit 10.bb to the 1993 Annual Report).

10.bc
License Agreement dated March 9, 1993 between Arrow International, Inc. and the Company. (Incorporated by reference to Exhibit
10.bc to the 1993 Annual Report).

10.bd
License Agreement dated April 28, 1993 between St. Jude Medical, Inc. and the Company. (Incorporated by reference to Exhibit 10.bd
to the 1993 Annual Report).

10.be
License Agreement dated November 11, 1993 between Katoh Hatsujyo Kaisha, Ltd. and the Company. (Incorporated by reference to Exhibit
10.be to the 1994 Annual Report).

10.bf
Lease Agreement dated June 9, 1995 between Salem Realty and the Company (Incorporated by reference to Exhibit 10.bf to the 1995
Annual Report).

10.bg
Amendment dated September 20, 1995 to License Agreement dated April 28, 1993 between St. Jude Medical, Inc. and the Company. (Incorporated
by reference to Exhibit 10.bg to the 1996 Annual Report).

10.bh
License Agreement dated April 12, 1990 between Interventional Therapeutics and the Company was terminated effective December 22,
1995. (Incorporated by reference to Exhibit 10.bh to the 1996 Annual Report).

10.bi
License Agreement dated May 16, 1991 between I E Sensors and the Company was terminated effective December 31, 1995. (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.

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.