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**FORM      10-QSB**

**HYDROMER,      INC.**

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

| 35                Industrial Pkwy, Branchburg, New Jersey          | 08876-3424                    |
|--------------------------------------------------------------------|-------------------------------|
| (Address                of principal executive offices)            | (Zip                Code)     |
|                                                               |                          |
| Registrant's                telephone number, including area code: | (908)                722-5000 |

|  Class |  Outstanding                at March 31, 2006 |
|-------------|----------------------------------------------------|
| Common      | 4,644,164                                          |

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|                                                                                                                      |                    |
|---------------------------------------------------------------------------------------------------------------------------|-------------------------|
|                                                                                                                      | Page                No. |
| Part                I - Financial Information                                                                             |                    |
|                                                                                                                      |                    |
| #                1                Consolidated Financial Statements                                                       |                    |
|                                                                                                                      |                    |
|                        Balance Sheets - March 31, 2006 & June 30, 2005             | 2                       |
|                                                                                                                      |                    |
|                        Statements of Income for the three months and nine months ended |                    |
| March                31, 2006 and 2005                                                                                    | 3                       |
|                                                                                                                      |                    |
|                        Statements of Cash Flows for the nine months ended              |                    |
| March                31, 2006 and 2005                                                                                    | 4                       |
|                                                                                                                      |                    |
|                        Notes to Financial Statements                                   | 5                       |
|                                                                                                                      |                    |
| #                2                Management's Discussion and Analysis of the Financial                Condition          |                    |
| and                Results of Operations                                                                                  | 6                       |
|                                                                                                                      |                    |
| #                3                Controls and Procedures                                                                 | 7                       |
|                                                                                                                      |                    |
|                                                                                                                      |                    |
| Part                II - Other Information                                                                                |                    |
|                                                                                                                      |                    |
| #                1                Legal Proceedings                                                                       | N/A                     |
|                                                                                                                      |                    |
| #                2                Change in Securities                                                                    | N/A                     |
|                                                                                                                      |                    |
| #                3                Default of Senior Securities                                                            | N/A                     |
|                                                                                                                      |                    |
| #                4                Submission of Motion to Vote of Security Holders                                        | N/A                     |
|                                                                                                                      |                    |
| #                5                Other Information                                                                       | N/A                     |
|                                                                                                                      |                    |
| #                6                Exhibits and Reports on form 8-K                                                        | 8                       |

| Exhibit                  No. | Description                  of Exhibit                                                      |   |
|------------------------------|----------------------------------------------------------------------------------------------|--------|
| 33.1                         | SEC                  Section 302 Certification - CEO                  certification          | 10     |
| 33.2                         | SEC                  Section 302 Certification - CFO                  certification          | 11     |
|                         |                                                                                         |   |
| 99.1                         | Certification                  of Manfred F. Dyck, Chief                  Executive Officer, |   |
|                         | pursuant                  to 18 U.S.C. Section 1350                                          | 12     |
|                         |                                                                                         |   |
| 99.2                         | Certification                  of Robert Y. Lee, Chief Financial                  Officer,   |   |
|                         | pursuant                  to 18 U.S.C. Section 1350                                          | 12     |

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**Part      I - Financial Information**

**Item      # 1**

**HYDROMER,        INC. and CONSOLIDATED SUBSIDIARY**

**CONSOLIDATED        BALANCE SHEETS**

|                                                                                                                                                                                                                                      |   |                        |               |                       |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------|--------------------|----------------------------|--------|
|                                                                                                                                                                                                                                      |   |                        |               |                       |   |
|                                                                                                                                                                                                                                      |   | March                    31 |               | June                    30 |   |
|                                                                                                                                                                                                                                      |   | **2006**                    |               | 2005                       |   |
|                                                                                                                                                                                                                                      |   | UNAUDITED                   |               | AUDITED                    |   |
| **Assets**                                                                                                                                                                                                                                |   |                        |               |                       |   |
| Current                    Assets:                                                                                                                                                                                                        |   |                        |               |                       |   |
| Cash                    and cash                    equivalents                                                                                                                                                                           |   | **$**                       | **380,074****.**   |                       | $      | 1,376,656.. |   |
| Trade                    receivables less allowance for doubtful accounts of $156,945                    as of March                    31, 2006 and $32,753 as of June 30, 2005                                                          |   |                        | **1,075,558**      |                       |   | 1,220,258 |   |
| Inventory                                                                                                                                                                                                                                 |   |                        | **1,163,835****.** |                       |   | 1,094,927.. |   |
| Prepaid                    expenses                                                                                                                                                                                                       |   |                        | **233,190****.**   |                       |   | 126,762.. |   |
| Deferred                    tax asset                                                                                                                                                                                                     |   |                        | **284,589****.**   |                       |   | 91,989.. |   |
| Other                                                                                                                                                                                                                                     |   |                        | **207,869****.**   |                       |   | 14,841.. |   |
| Total                    Current Assets                                                                                                                                                                                                   |   |                        | **3,345,114**      |                       |   | 3,925,433.. |   |
|                                                                                                                                                                                                                                      |   |                        |               |                       |   |   |   |
| Property                    and equipment, net                                                                                                                                                                                            |   |                        | **3,366,632****.** |                       |   | 3,276,258.. |   |
| Intangible                    assets, net                                                                                                                                                                                                 |   |                        | **828,084****.**   |                       |   | 780,140.. |   |
| Goodwill,                    net                                                                                                                                                                                                          |   |                        | **238,172****.**   |                       |   | 238,172.. |   |
| Other,                    non-current                                                                                                                                                                                                     |   |                        | **114,377**        |                       |   | - |   |
| Total                    Assets                                                                                                                                                                                                           |   | **$**                       | **7,892,379****.** |                       | $      | 8,220,003.. |   |
|                                                                                                                                                                                                                                      |   |                        |               |                       |   |   |   |
| **Liabilities                    and Stockholders’ Equity**                                                                                                                                                                         |   |                        |               |                       |   |   |   |
| Current                    Liabilities:                                                                                                                                                                                                   |   |                        |               |                       |   |   |   |
| Accounts                    payable                                                                                                                                                                                                       |   | **$**                       | **653,944****.**   |                       | $      | 466,993. |   |
| Short-term                    borrowings                                                                                                                                                                                                  |   |                        | **414,858****.**   |                       |   | 206,663. |   |
| Accrued                    expenses                                                                                                                                                                                                       |   |                        | **295,684****.**   |                       |   | 280,944. |   |
| Bonus                    payable                                                                                                                                                                                                          |   |                        | **-**              |                       |   | 77,267. |   |
| Current                    portion of deferred revenue                                                                                                                                                                                    |   |                        | **169,065****.**   |                       |   | 161,317. |   |
| Current                    portion of mortgage payable                                                                                                                                                                                    |   |                        | **198,961**        |                       |   | 178,029. |   |
| Total                    Current Liabilities                                                                                                                                                                                              |   |                        | **1,708,058**.     |                       |   | 1,371,213. |   |
| Deferred                    tax liability                                                                                                                                                                                                 |   |                        | **243,864****.**   |                       |   | 243,864**.** |   |
| Long-term                    portion of deferred revenue                                                                                                                                                                                  |   |                        | **91,867**.        |                       |   | 176,979. |   |
| Long-term                    portion of mortgage payable                                                                                                                                                                                  |   |                        | **2,144,914****.** |                       |   | 2,295,292**.** |   |
| Total                    Liabilities                                                                                                                                                                                                      |   |                        | **4,188,703**.     |                       |   | 4,087,348. |   |
|                                                                                                                                                                                                                                      |   |                        |               |                       |   |   |   |
| 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;                                                                                                                                                             |   |                        |               |                       |   |   |   |
| as                    of March 31, 2006, 4,655,081 shares issued and 4,644,164 shares                    outstanding; as of June 30, 2005, 4,608,904 shares issued and                    4,597,987                    shares outstanding |   |                        | **3,639,315**      |                       |   | 3,631,615 |   |
| Contributed                    capital                                                                                                                                                                                                    |   |                        | **577,750****.**   |                       |   | 577,750.. |   |
| Accumulated                    deficit                                                                                                                                                                                                    |   |                        | **(531,703**       | **)**                      |   | (70,570). |   |
| Treasury                    stock, 10,917 common shares at cost                                                                                                                                                                           |   |                        | **(6,140**         | **)**                      |   | (6,140). |   |
| Total                    Stockholders’ Equity                                                                                                                                                                                       |   |                        | **3,679,222****.** |                       |   | 4,132,655.. |   |
| Total                    Liabilities and Stockholders’ Equity                                                                                                                                                                       |   | **$**                       | **7,892,379****.** |                       | $      | 8,220,003.. |   |

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**HYDROMER,      INC. and CONSOLIDATED SUBSIDIARY**

**CONSOLIDATED      STATEMENTS OF INCOME**

|                                                                                                                                              |   | Three                  Months EndedMarch                  31, |                      | Nine                  Months EndedMarch                  31, |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------|---------------------------|--------------------------------------------------------------|--------|
|                                                                                                                                              |   |
|                                                                                                                                              |   | **2006**                                                      |                      | 2005                                                         |   | **2006** |   | 2005 |   |
|                                                                                                                                              |   | **UNAUDITED**                                                 |                      | UNAUDITED                                                    |   | **UNAUDITED** |   | UNAUDITED |   |
| **Revenues**                                                                                                                                      |   |                                                          |                      |                                                         |   |   |   |   |   |
|   Sale                  of                  products                                                                                    |   | **$**                                                         | **1,134,148**             |                                                         | $      | 1,372,627 |   |   | **3,350,277** |   | $ | 3,646,382 |   |
|   Service                  revenues                                                                                                     |   |                                                          | **347,825**               |                                                         |   | 244,211 |   |   | **838,589** |   |   | 829,523 |   |
|   Royalties                  and                  Contract Revenues                                                                     |   |                                                          | **439,112**               |                                                         |   | 651,500 |   |   | **1,476,555** |   |   | 1,920,459 |   |
|  **  Total                  Revenues**                                                                                             |   |                                                          | **1,921,085**             |                                                         |   | 2,268,338 |   |   | **5,665,421** |   |   | 6,396,364 |   |
|  **Expenses**                                                                                                                                |   |                                                          |                      |                                                         |   |   |   |   |   |   |   |   |   |
|   Cost                  of                  Sales                                                                                       |   |                                                          | **851,911**               |                                                         |   | 869,268 |   |   | **2,472,643** |   |   | 2,325,431 |   |
|   Operating                  Expenses                                                                                                   |   |                                                          | **1,448,766**             |                                                         |   | 1,203,428 |   |   | **4,072,855** |   |   | 3,783,314 |   |
|   Other                  (Income) /                  Expenses                                                                           |   |                                                          | **(247,174**              | **)**                                                        |   | 26,892 |   |   | **(181,390** | **)** |   | 74,452 |   |
|   (Benefit)                  Provision                  for Income Taxes                                                                |   |                                                          | **(45,023**               | **)**                                                        |   | 78,544 |   |   | **(237,554** | **)** |   | 89,556 |   |
| **        Total                  Expenses**                                                               |   |                                                          | **2,008,480**             |                                                         |   | 2,178,132 |   |   | **6,126,554** |   |   | 6,272,753 |   |
|  **        Net                  (Loss) Income**                                                      |   | **$**                                                         | **(87,395**               | **)**                                                        | $      | 90,206 |   | **$** | **(461,133** | **)** | $ | 123,611 |   |
|          (Loss)                  Earnings Per Common Share                                           |   | **$**                                                         | **(0.02**                 | **)**                                                        | $      | 0.02 |   | **$** | **(0.10** | **)** | $ | 0.03 |   |
| Weighted                  Average Number of          Common                  Shares Outstanding |   |                                                          |  **4,644,164**  |                                                         |   | 4,623,214  |   |   | **4,637,582**  |   |   | 4,611,365  |   |
|                                                                                                                                              |   |                                                          |                           |                                                         |   |   |   |   |   |   |   |   |   |

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**HYDROMER,      INC. and CONSOLIDATED SUBSIDIARY**

**CONSOLIDATED      STATEMENTS OF CASH FLOWS**

|                                                                                                                                                                                                   |   | Nine                    Months EndedMarch                    31, |          |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------|---------------|
|                                                                                                                                                                                                   |   |
|                                                                                                                                                                                                   |   | **2006**                                                         |          | **2005** |   |
|                                                                                                                                                                                                   |   | **UNAUDITED**                                                    |          | **UNAUDITED** |   |
| **Cash                    Flows From Operating Activities:**                                                                                                                                           |   |                                                             |          |   |   |
|   Net                    (Loss)                    Income                                                                                                                                    |   | **$**                                                            | **(461,133**  | **)** | $ | 123,611 |   |
|   Adjustments                    to                    reconcile net (loss) income to net cash provided by   (used                    for)                    operating activities |   |                                                             |          |   |   |   |   |
|    Depreciation                    and amortization                                                                                                                                     |   |                                                             | **176,723**   |   |   | 146,177 |   |
|    Deferred                    income                    taxes                                                                                                                          |   |                                                             | **(192,600**  | **)** |   | 20,919 |   |
|    Changes                    in                    Assets and Liabilities                                                                                                              |   |                                                             |          |   |   |   |   |
|       Trade                    receivables                                                                                                                               |   |                                                             | **144,700**   |   |   | (119,305 | ) |
|       Inventory                                                                                                                                                          |   |                                                             | **(68,908**   | **)** |   | (24,217 | ) |
|       Prepaid                    expenses                                                                                                                                |   |                                                             | **(106,428)** |   |   | (46,065) |   |
|       Patents                    and                    Trademark                                                                                                        |   |                                                             | **(47,944**   | **)** |   | (102,052 | ) |
|       Other                    assets                                                                                                                                    |   |                                                             | **(314,772)** |   |   | (466 | ) |
|       Accounts                    payable                    and accrued liabilities                                                                                     |   |                                                             | **124,424**   |   |   | 51,346 |   |
|       Deferred                    income                                                                                                                                 |   |                                                             | **(77,364**   | **)** |   |   |   |
|       Income                    taxes                    payable                                                                                                         |   |                                                             | **-**         |   |   | (9,663 | ) |
|         Net                    Cash (Used for) Provided by Operating Activities                                                                                |   |                                                             | **(823,302**  | **)** |   | 40,285 |   |
|                                                                                                                                                                                                   |   |                                                             |          |   |   |   |   |
|  **Cash                    Flows From Investing Activities:**                                                                                                                                     |   |                                                             |          |   |   |   |   |
|   Cash                    purchases of                    property and equipment                                                                                                             |   |                                                             | **(267,096**  | **)** |   | (351,758 | ) |
|   Cash                    purchases of                    short-term investments                                                                                                             |   |                                                             | **(392,633**  | **)** |   | - |   |
|   Maturity                    of                    short-term investments                                                                                                                   |   |                                                             | **400,000**   |   |   | - |   |
|         Net                    Cash Used for Investing Activities                                                                                         |   |                                                             | **(259,729**  | **)** |   | (351,758 | ) |
|                                                                                                                                                                                                   |   |                                                             |          |   |   |   |   |
| **Cash                    Flows From Financing Activities:**                                                                                                                                           |   |                                                             |          |   |   |   |   |
|   Net                    borrowings                    against Line of Credit                                                                                                                |   |                                                             | **208,195**   |   |   | 390,971 |   |
|   Repayment                    of                    long-term borrowings                                                                                                                    |   |                                                             | **(129,446**  | **)** |   | (67,282 | ) |
|   Proceeds                    from the                    issuance of common stock                                                                                                           |   |                                                             | **7,700**     |   |   | 16,000 |   |
| Net                    Cash Provided by Financing Activities                                                                                                                                           |   |                                                             | **86,449**    |   |   | 339,689 |   |
|                                                                                                                                                                                                   |   |                                                             |          |   |   |   |   |
| **Net                    (Decrease) Increase in Cash and Cash Equivalents:**                                                                                                                           |   |                                                             | **(996,582**  | **)** |   | 28,216 |   |
| Cash                    and Cash Equivalents at Beginning of Period                                                                                                                                    |   |                                                             | **1,376,656** |   |   | 142,476 |   |
|  Cash                    and Cash Equivalents at End of Period                                                                                                                                    |   | **$**                                                            | **380,074**   |   | $ | 170,692 |   |

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**HYDROMER,      INC. and CONSOLIDATED SUBSIDIARY**

|                                 |   | Polymer                Research |       | Medical                Products |   | Corporate                Overhead |   |  Total |       |
|--------------------------------------|--------|---------------------------------|------------|---------------------------------|--------|-----------------------------------|--------|-------------|------------|
| 2006                                 |   |                            |       |                            |   |                              |   |        |       |
| Revenues                             |   | $                               | 3,222,757  |                            | $      | 2,442,664                         |   |        | -          |   | $ | 5,665,421 |   |
| Expenses                             |   |                            | (2,558,212 | )                               |   | (2,687,553                        | )      | $           | (1,118,343 | ) |   | (6,364,108 | ) |
| Pre-tax                Income (Loss) |   | $                               | 664,545    |                            | $      | (244,889                          | )      | $           | (1,118,343 | ) | $ | (698,687 | ) |
|                                 |   |                            |       |                            |   |                              |   |        |       |   |   |   |   |
| 2005                                 |   |                            |       |                            |   |                              |   |        |       |   |   |   |   |
| Revenues                             |   | $                               | 4,065,309  |                            | $      | 2,331,055                         |   |        |       |   | $ | 6,396,364. |   |
| Expenses                             |   |                            | (2,501,289 | )                               |   | (2,747,266                        | )      | $           | (934,643   | ) |   | (6,183,198 | ) |
| Pre-tax                Income (Loss) |   | $                               | 1,564,021  |                            | $      | (416,211                          | )      | $           | (934,643   | ) | $ | 213,167 |   |
|                                 |   |                            |       |                            |   |                              |   |        |       |   |   |   |   |

|     | 2006 | 2005 |
|----------|------|------|
| Domestic | 83%  | 82%  |
| Foreign  | 17%  | 18%  |

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**Item      #2**

**MANAGEMENT’S      DISCUSSION AND ANALYSIS OF THE**

**FINANCIAL      CONDITION AND RESULTS OF OPERATIONS**

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**Item      # 3**

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**PART      II - Other Information**

**Item      # 6.**

| b)   | Reports                on form 8-K - There were two Form 8-K’s filed during the quarter ending                March 31, 2006. One related to the announcement of a patent award                on a                water-based lubricious coating, and the other regarding the patent                litigation settlement with Veterinary Pharmaceuticals Inc. |
|----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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**SIGNATURES**

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