UNITED
STATESSECURITIES AND EXCHANGE COMMISSIONWashington,
D.C. 20549

_________________

FORM
10-Q





_________________

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

For
the quarterly period ended: December 31, 2012

or

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

For
the transition period from: ______ to ______

_________________







HYDROMER INC.



(Exact
name of registrant as specified in its charter)



_________________

|New Jersey                        | 001-31238    | 22-2303576         
|--------------------------------- | ------------ | -------------------
|(State or Other Jurisdiction      | (Commission  | (I.R.S. Employer   
|of Incorporation or Organization) | File Number) | Identification No.)

35 Industrial Pkwy, Branchburg, New
Jersey 08876-3424(Address of Principal Executive Offices)
(Zip Code)

(908) 722-5000(Registrant’s
telephone number, including area code)

N/A(Former
name or former address and former fiscal year, if changed since last report)

_________________

Indicate by check mark whether
the registrant (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 reports), and (2) has been subject
to such filing requirements for the past 90 days.    Yes  þNo o

Indicate by check mark
whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File
required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the
preceding 12 months (or for such shorter period that the registrant was required to submit and post such
files).  Yes  þNo o

Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer,
a non-accelerated filer, or a smaller reporting company.

|Large accelerated filer  o | Accelerated filer  o | Non-accelerated filer  o | Smaller reporting company  þ
|-------------------------- | -------------------- | ------------------------ | ----------------------------

Indicate by check mark
whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).    Yes  o    Noþ



APPLICABLE
ONLY TO CORPORATE ISSUERS







Indicate
the number of shares outstanding of the issuer's common stock, as of the latest practical date: As of December 31, 2012 There
were 4,772,318 shares outstanding





















FORWARD-LOOKING
                     STATEMENTS



This
quarterly report on Form 10-Q 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 quarterly report on Form 10-Q 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.























|                                   | HYDROMER,
    INC.                                                 |         
|---------------------------------- | ------------------------------------------------------------------ | --------
|                                   |                                                                    |         
|                                   | INDEX
    TO FORM 10-Q                                             |         
|                                   | December
    31, 2012                                              |         
|                                   |                                                                    |         
|                                   |                                                                    |         
|                                   |                                                                    | Page No.
|Part
    I - Financial Information |                                                                   
|                                   |                                                                    |         
|                                   | Item  1 Condensed Consolidated Financial Statements                |         
|                                   |                                                                    |         
|                                   | Condensed Consolidated Balance Sheets                              |         
|                                   | as of December 31, 2012 & June 30, 2012                            |         
|                                   |                                                                    |         
|                                   | Condensed Consolidated Statements of Operations                    |         
|                                   | for the three and six months ended December 31, 2012 and 2011      |         
|                                   |                                                                    |         
|                                   | Condensed Consolidated Statements of Cash Flows                    |         
|                                   | for the six months ended December 31, 2012 and 2011                |         
|                                   |                                                                    |         
|                                   | Notes to Condensed Consolidated Financial Statements               |         
|                                   |                                                                    |         
|                                   | Item 2 Management's Discussion and Analysis of Financial Condition |         
|                                   | and Results of Operations                                          | 1       
|                                   |                                                                    |         
|                                   | Item  3 Quantitative and Qualitative Disclosures about Market Risk | N/A     
|                                   |                                                                    |         
|                                   | Item 4 Controls and Procedures                                     | 4       
|                                   |                                                                    |         
|Part
    II - Other Information    |                                                                   
|                                   |                                                                    |         
|                                   | Item 1 Legal Proceedings                                           | N/A     
|                                   | Item 1A. Risk Factors                                              | N/A     
|                                   | Item 2 Unregistered Sales of Equity Securities and Use of Proceeds | N/A     
|                                   | Item  3 Defaults Upon Senior Securities                            | N/A     
|                                   | Item 4 Mine Safety Disclosures                                     | N/A     
|                                   | Item 5 Other Information                                           | N/A     
|                                   | Item  6 Exhibits                                                   | 4       
|                                   | Signatures                                                         | 5       







|                |                                                            | 
|--------------- | ---------------------------------------------------------- | 
|                | EXHIBIT
    INDEX                                          | 
|                |                                                            | 
|Exhibit
    No. | Description
    of Exhibit                                 | 
|31.1            | SEC Section 302 Certification – CEO certification          | 
|31.2            | SEC Section 302 Certification – CFO certification          | 
|32.1            | Certification of Manfred F. Dyck, Chief Executive Officer, | 
|                | pursuant to 18 U.S.C. Section 1350                         | 
|32.2            | Certification of Robert Y. Lee, Chief Financial Officer,   | 
|                | pursuant to 18 U.S.C. Section 1350                         | 









Part I – Financial Information

Item  1  Condensed Consolidated Financial StatementsFONT



|HYDROMER, INC. and CONSOLIDATED SUBSIDIARY                                                                                                                          
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------
|CONDENSED CONSOLIDATED BALANCE SHEETS                                                                                                                               
|                                                                                                                                                                    
|                                                                                                                                                                    
|                                                                                                                                                                    
|ASSETS                                                                                                                                                              
|Current Assets:                                                                                                                                                     
|Cash
    and cash equivalents                                                                                                                                       
|Trade
    Receivables less allowance for doubtful accounts of $7,255 and $5,622 as of December 31, 2012 and June 30, 2012, respectively                             
|Inventory                                                                                                                                                           
|Prepaid
    Assets                                                                                                                                                  
|Other                                                                                                                                                               
|Total
    Current Assets                                                                                                                                            
|                                                                                                                                                                    
|Property
    and Equipment, net                                                                                                                                     
|Deferred
    tax asset, non-current                                                                                                                                 
|Intangible
    assets, net                                                                                                                                          
|Other                                                                                                                                                               
|Total
    Assets                                                                                                                                                    
|                                                                                                                                                                    
|LIABILITIES
    & STOCKHOLDERS' EQUITY                                                                                                                              
|Accounts
    Payable                                                                                                                                                
|Accrued
    Expenses                                                                                                                                                
|Current
    portion of capital lease                                                                                                                                
|Current
    portion of deferred revenue                                                                                                                             
|Current
    portion of mortgage payable                                                                                                                             
|Total
    Current Liabilities                                                                                                                                       
|                                                                                                                                                                    
|Deferred
    Tax Liability                                                                                                                                          
|Long
    term portion of deferred revenue                                                                                                                           
|Long
    term portion of mortgage payable                                                                                                                           
|Total
    Liabilities                                                                                                                                               
|                                                                                                                                                                    
|Stockholders'
    Equity                                                                                                                                            
|Preferred
    Stock - no par value, authorized 1,000,00 shares; no shares issued and outstanding                                                                    
|Common
    Stock - no par value, authorized 15,000,00 shares; 4,783,235 shares issued and 4,772,318 shares outstanding as of December
    31, 2012 and June 30, 2012
|Contributed
    capital                                                                                                                                             
|Accumulated
    deficit                                                                                                                                             
|Treasury
    stock, 10,917 common shares at cost                                                                                                                    
|Total
    Stockholders' Equity                                                                                                                                      
|Total
    Liabilities and Stockholders' Equity                                                                                                                      



See accompanying notes









|HYDROMER, INC. and CONSOLIDATED SUBSIDIARY     
|-----------------------------------------------
|CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
|(unaudited)                                    
|                                               
|                                               
|                                               
|                                               
|                                               
|Revenues                                       
|Sales
    of Products                          
|Service
    Revenues                           
|Royalties
    and contract revenues            
|Total
    Revenues                             
|                                               
|Expenses                                       
|Cost
    of Sales                              
|Operating
    Expenses                         
|Other
    (Income) Expenses                    
|Provision
    for (Benefit from) Income Taxes  
|Total
    Expenses                             
|                                               
|Net
    Income (Loss)                          
|                                               
|Income
    (Loss) Per Common Share             
|Weighted
    Average Number of                 
|Common
    Shares Outstanding                  





See accompanying notes.



There was no impact to earnings per share from
dilutive securities

as the result would have been anti-dilutive.









|HYDROMER, INC. and CONSOLIDATED SUBSIDIARY                                              
|----------------------------------------------------------------------------------------
|CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS                                         
|(unaudited)                                                                             
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|Cash Flows from Operating Activities:                                                   
|Net Loss                                                                                
|Adjustments to reconcile net loss to net cash provided by (used in) operating activities
|Depreciation and Amortization                                                           
|Deferred income taxes                                                                   
|Changes in Assets and Liabilities                                                       
|Trade receivables                                                                       
|Inventory                                                                               
|Prepaid expenses                                                                        
|Other assets                                                                            
|Accounts payable and accrued liabilities                                                
|Deferred income                                                                         
|Income taxes payable                                                                    
|Net Cash Provided by (Used in) Operating Activities                                     
|                                                                                        
|Cash Flows from Investing Activities:                                                   
|Cash purchases of property and equipment                                                
|Cash payments on patents and trademarks                                                 
|Redemption of matured short-term investments                                            
|Net Cash Used in Investing Activities                                                   
|                                                                                        
|Cash Flows from Financing Activities:                                                   
|Repayment of long-term borrowings                                                       
|Net Cash Used in Financing Activities                                                   
|                                                                                        
|Net Increase (Decrease) in Cash and Cash equivalents                                    
|                                                                                        
|Cash and Cash equivalents, Beginning of Period                                          
|Cash and Cash equivalents, End of Period                                                

See accompanying notes.











HYDROMER, INC. and CONSOLIDATED SUBSIDIARY

Notes
to Condensed Consolidated Financial Statements



Basis
of Presentation:

In
the opinion of management, the accompanying unaudited condensed financial statements include all adjustments (consisting of only
normal adjustments) necessary for a fair presentation of the results for the interim periods. These condensed financial statements,
including notes, have been prepared in accordance with the applicable rules of the Securities and Exchange Commission and do not
include all of the information and disclosures required by accounting principles generally accepted in the United States of America.
The condensed financial statements should be read in conjunction with the consolidated financial statements and other information
contained in our Annual Report on Form 10-K for the year ended June 30, 2012. The condensed balance sheet at June 30, 2012 was
derived from audited financial statements but does not include all disclosures required by accounting principles generally accepted
in the United States of America.



Segment
Reporting:

The
Company operates two primary business segments. The Company evaluates the segments by revenues, total expenses and earnings before
taxes. 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)) are excluded from the business segments
as to not distort the contribution of each segment. These segments are the lowest levels for which identifiable cash flows are
largely independent of the cash flows of other assets and liabilities.



The
results for the six months ended December 31, by segment are:

|                                                                                                                                                                                                                                                                                                                                            |  |  |   | Polymer    |   |  |   | Medical  |   |  |   | Corporate |   |  |   |            |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  |  | - | ---------- | - |  | - | -------- | - |  | - | --------- | - |  | - | ---------- | -
|2012                                                                                                                                                                                                                                                                                                                                        |  |  |   | Research   |   |  |   | Products |   |  |   | Overhead  |   |  |   | Total      |  
|Revenues                                                                                                                                                                                                                                                                                                                                    |  |  | $ | 1,944,602  |   |  | $ | 653,516  |   |  |   |           |   |  | $ | 2,598,118  |  
|Expenses                                                                                                                                                                                                                                                                                                                                    |  |  |   | (1,348,090 | ) |  |   | (572,066 | ) |  | $ | (727,959  | ) |  |   | (2,648,115 | )
|Pre-tax
                                                                                                                                                           Income
                                                                                                                                                           (Loss) |  |  | $ | 596,512    |   |  | $ | 81,450   |   |  | $ | (727,959  | ) |  | $ | (49,997    | )
|                                                                                                                                                                                                                                                                                                                                            |  |  |   |            |   |  |   |          |   |  |   |           |   |  |   |            |  
|2011                                                                                                                                                                                                                                                                                                                                        |  |  |   |            |   |  |   |          |   |  |   |           |   |  |   |            |  
|Revenues                                                                                                                                                                                                                                                                                                                                    |  |  | $ | 2,177,765  |   |  | $ | 663,540  |   |  |   |           |   |  | $ | 2,841,305  |  
|Expenses                                                                                                                                                                                                                                                                                                                                    |  |  |   | (1,764,113 | ) |  |   | (526,722 | ) |  | $ | (796,417  | ) |  |   | (3,087,252 | )
|Pre-tax
                                                                                                                                                           Income
                                                                                                                                                           (Loss) |  |  | $ | 413,652    |   |  | $ | 136,818  |   |  | $ | (796,417  | ) |  | $ | (245,947   | )





Geographic
revenues were as follows for the six months ended December 31,

| |          | 2012 |  | 2011
| | -------- | ---- |  | ----
| | Domestic |      |  |     
| | Foreign  |      |  |     





Inventory

Inventory
consists of:

|                    | December
    31, 2012 | June
    30, 2012
|------------------- | --------------------- | -----------------
|Finished
    goods  | $
    179,046         | $
    132,673    
|Work
    in process | 2,232                 | 6,156            
|Raw
    materials   | 165,053               | 170,540          
|                    | $
    346,331         | $
    309,369    











ITEM
2MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS



Results
of Operations



The
Company’s revenues for the quarter ended December 31, 2012 were $1,331,628, $61,080 or 4.4% lower than the $1,392,708 for
the same period the previous year. For the six month period ended December 31, revenues were $2,598,118 during the current fiscal
year, as compared with $2,841,305 the year before or $243,187 lower (8.6%). Revenues are comprised of the sale of Products and
Services and Royalty and Contract payments.



Product
sales were $681,321 for the quarter ended December 31, 2012 as compared to $744,189 for the same period the year before, a $62,868
(8.5%) decrease primarily due to the timing of periodic (non-monthly) sales and the drop off in T-HEXX Dragonhyde Hoof Bath Concentrate
sales in Europe due to the high landed cost the end user is facing. Our recently launched Dragonhyde DUST dissolvable hoof bath
powder being released to Europe in 2013 should alleviate that issue. (The recommended usage of Dragonhyde DUST, which can be shipped
by regular mail, is a 1 kg pouch as compared with one gallon of Dragonhyde Hoof Bath Concentrate (which weighs approximately 4
kg) which needs special handling.) The majority of the customers that ordered on a periodic basis during the 2011 period also
ordered in our fiscal quarter ended June 30, 2012 which meant that their new orders are expected in early 2013. Such sales decrease
was offset by an increased demand for our anti-fog condensation control coatings, Cosmetics / Personal Care intermediaries and
medical device coatings. For the six month period, product sales were $1,277,403 for the 2012 period as compared with $1,501,239
for the 2011 period, lower by $223,836 (14.9%), all attributable to the T-HEXX Animal Health line.



Services
revenues, comprised of contract coating services, for the three months ended December 31, 2011 were $335,167 or $36,081 lower
(9.7%) than the $371,248 the corresponding period the year before. For the six month periods ended December 31, 2012 and December
31, 2011, services revenues were $656,938 and $721,647, respectively, or $64,709 lower (9.0%). Customers exiting their respective
business on products utilizing our contract coating services plus those converting to their own coating application while becoming
a medical chemical polymer purchaser lowered the services revenues as compared with the prior period. These “converted”
customers allow for additional revenues from medical device coating [product] sales (as reported above) and Supply and Support
Agreements (see Royalty and Contract revenues following).



Classified
as Royalty and Contract revenues are royalties received and the periodic recurring payments from license, stand still and other
agreements other than for product and services, including revenues from support and supply agreements (which avails our customers
to continued technical support and/or guaranteed access to our proprietary coatings) and may include the transfer of technical
know-how (coatings procedures). Some of the royalties and support fees are based on the net sales of the final item (to which
the Hydromer technology is applied) and are subject to the reporting of our customers. For the six months ended December 31, 2012,
Royalty and Contract revenues were $663,777, compared to $618,419 the same period a year ago, an increase of $45,358 (7.3%), a
result of a new customer converting to Hydromer coatings under a royalty agreement.









Total
Expenses for the quarter ended December 31, 2012 were $1,298,255 as compared with $1,467,794 the year before, a 11.6% decrease.
For the six months ended December 31, 2012, Total Expenses were $2,642,567 as compared with $3,002,580 the previous year, a 12.0%
decrease.



Reducing
Total Expenses and included in Other Income for the quarter ended December 31, 2012 was $115,344 in income recognized of the proceeds
from the Company’s insurance carrier, a mutual company having no shareholders, making distributions from it being acquired.
There will be additional periodic payments which the Company will include in Other Income.

For the quarter ended December 31, 2012, the Company’s
Cost of Goods Sold was $405,097 as compared with $422,119 the year prior, lower by $17,022 or 4.0%, a result of the lower product
sales. For the six month period ended December 31, 2012, Cost of Goods Sold was $765,246 as compared with $838,131 the same period
a year ago. The $72,885 decrease (8.7%) was due to lower product sales.



Operating
Expenses were $938,745 for the quarter ended December 31, 2012 as compared to $1,037,556 the year before, lower by $98,811 or
9.5%, due to lower staffing levels this year. For the six months ended December 31, 2012, Operating Expenses were $1,900,213 or
$242,668 lower (11.3%) than the previous year’s $2,142,881, primarily due to operating on a lower staffing level.



In
addition to the one time $115,344 distribution recognized as income, Other Income / Expenses includes interest expense, foreign
currency exchange gains/losses and interest income. Interest expense (primarily mortgage interest) for the six months ended December
31, 2012 and December 31, 2011 was $97,201 and $98,743, respectively.



Net
income of $33,373 ($0.01 per share) is reported for the quarter ended December 31, 2012 as compared to a net loss of $75,086 ($0.02
per share) the year before. For the six months ended December 31, 2012, a net loss of $44,449 ($0.01 per share) is reported as
compared to a net loss of $161,275 ($0.03 per share) the year before.



Maintaining
or reducing expenses is part of the Company’s strategy in its return to profitability. Along with revenue increases (due
to new products or the market penetration of current products), the Company expects to achieve profitability. While we did not
see a net growth in revenue during the current period (as compared with the prior year), we expect that to occur soon.



Financial
Condition



Working
capital decreased $40,641 during the six months ended December 31, 2012.



For
the six months ended December 31, 2012, operating activities provided $153,236 in net cash.



The
net loss, as adjusted for non-cash expenses of depreciation and amortization and deferred income taxes, provided $145,970 in cash.
The net change in operating assets and liabilities provided an additional $7,266 in cash. Reductions to accounts receivable and
prepaid expenses were offset by the increase to other assets (the distribution by the insurance carrier, which was received in
mid-January 2013).



Investing
activities used $110,644 and financing activities used $28,628 during the six months ended December 31, 2012.



Investing
activities for the six months ended December 31, 2012 included $28,667 for capital expenditures and $81,977 towards the Company’s
patent estate. Under Financing activities was the repayment of the principal portion of the mortgage.



The
Company is nearing a return to profitability. Cost management and revenue growth are the key factors and while we did not reach
the same revenue levels achieved a year ago, it is certainly within reach. During the past few years, the Company’s R&D
resources were dedicated to its T-HEXX Animal Health product line as that could yield the quickest revenue return (as compared
with the much longer term human medical product line). Some of the recent developments in the T-HEXX product line are being rolled
out into the market.









Item
4Controls and Procedures



As
of the period covered by this report, the Company carried out an evaluation, under the supervision and with the participation
of our management, including the Chief Executive Officer and President and the Chief Financial Officer, of the effectiveness of
the design and operation of the disclosure controls and procedures.



Based
upon this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, our disclosure controls and procedures
were effective and that there were no changes to our Company’s internal control over financial reporting that have materially
affected, or are reasonably likely to materially affect the Company’s internal control over financial reporting during the
period covered by the Company’s quarterly report.





PART
II – Other Information



The
Company operates entirely from its sole location at 35 Industrial Parkway in Branchburg, New Jersey, an owned facility secured
by a mortgage through a bank.

The
existing facility will be adequate for the Company’s operations for the foreseeable future.



Item
6Exhibits



|Exhibit
    No. | Description                                                                              
|--------------- | -----------------------------------------------------------------------------------------
|31.1            | Rule
    13a-14(a) Certification of Chief Executive Officer and President                
|31.2            | Rule
    13a-14(a) Certification of Vice President of Finance and Chief Financial Officer
|32.1            | Section
    1350 Certification of Chief Executive Officer and Chairman, President        
|32.2            | Section
    1350 Certification of Chief  Financial Officer and Vice President of Finance 













SIGNATURES





Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on his behalf
by the undersigned thereunto duly authorized.









|Date: February
     15, 2013 | Hydromer                                                                
|---------------------------- | ------------------------------------------------------------------------
|                             | By: /s/ Robert Y. Lee                                                   
|                             | Robert Y. LeePrincipal Accounting officer
     & Chief Financial Officer