UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

/X/ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
    Act of 1934 
    For the Quarterly Period Ended:  March 31, 1998 or

/   /Transition Report Pursuant to Section 13 or 15 (d) of the Securities
    Exchange Act of 1934 
    For the Period from __________ to __________

                         Commission File Number: 0-6333

                            HYDRON TECHNOLOGIES, INC.
             (Exact name of Registrant as specified in its charter)


New York                                           13-1574215
(State or other jurisdiction of                    (I.R.S. Employer
incorporation or organization)                     Identification No.)


1001 Yamato Road, Suite 403, Boca Raton, Florida   33431
(Address of principal executive offices)           (Zip Code)


       Registrant's telephone number, including area code: (561) 994-6191


     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. /X/ Yes / / No


Number of shares of common stock outstanding as of May 12, 1998:  24,294,816



                                  Page 1 of 15
<PAGE>

                  HYDRON TECHNOLOGIES, INC. AND SUBSIDIARIES

                                    Index



Part I. Financial Information

Item 1. Financial Statements (Unaudited)

   Condensed consolidated balance sheets -- 
   March 31, 1998 and December 31, 1997

   Condensed consolidated statements of operations -- 
   Three months ended March 31, 1998 and 1997

   Condensed consolidated statements of cash flows -- 
   Three months ended March 31, 1998 and 1997

   Notes to condensed consolidated financial statements -- 
   March 31, 1998

Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations


Part II. Other Information

Item 5. Other Information

Item 6. Exhibits and Reports on Form 8-K


Signatures


                                  Page 2 of 15
<PAGE>

                  HYDRON TECHNOLOGIES, INC. AND SUBSIDIARIES

                    Condensed Consolidated Balance Sheets

                                               March 31, 1998  December 31, 1997
                                               ---------------------------------
ASSETS                                           (Unaudited)           (Note)
Current assets:
  Cash and cash equivalents                     $  2,418,830     $  2,133,722
  Trade accounts receivable                          379,209          554,476
  Inventories                                      2,425,765        2,798,395
  Prepaid expenses and other
   current assets                                    106,259          131,562
                                                ------------------------------

  Total current assets                             5,330,063        5,618,155
Property and equipment, net                          684,112          734,670
Investment in joint venture                          308,087          288,055
Deferred product costs, less
  accumulated amortization of
  $4,391,325 and $4,313,950 at
  1998 and 1997, respectively                      1,583,104        1,660,479
Deposits                                             427,366          449,984
                                                ------------------------------
                                                $  8,332,732     $  8,751,343
                                                ------------------------------


LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
  Accounts payable                              $    183,551     $    580,597
  Accrued liabilities                                381,362          313,508
                                                ------------------------------
  Total current liabilities                          564,913          894,105
Shareholders' equity:
  Common stock -- $.01 par value;
   30,000,000 shares authorized;
   24,796,816 shares issued
   and outstanding                                   247,968          247,968
  Additional paid-in capital                      19,231,566       19,231,566
  Accumulated deficit                            (11,280,370)     (11,190,951)
  Treasury Stock, at cost, 251,000 shares           (431,345)        (431,345)
                                                ------------------------------
   Total shareholders' equity                      7,767,819        7,857,238
                                                ------------------------------
                                                $  8,332,732     $  8,751,343
                                                ==============================


Note: The balance sheet at December 31, 1997 has been derived from the audited
financial statements at that date but does not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements.


            See notes to condensed consolidated financial statements.

                                  Page 3 of 15
<PAGE>

                   HYDRON TECHNOLOGIES, INC. AND SUBSIDIARIES

                 Condensed Consolidated Statements Of Operations
                                   (Unaudited)

                   Three Months Ended March 31, 1998 and 1997


                                                       1998             1997
                                                   -----------------------------
Net sales                                          $ 1,311,218      $ 2,408,204
Cost of sales                                          543,406          997,719
                                                   -----------------------------
Gross profit                                           767,812        1,410,485
                                                   -----------------------------

Expenses:
  Royalty expense                                       55,894          120,964
  Research and development                             118,329           80,643
  Selling, general & administrative                    605,627        1,130,253
  Depreciation & amortization                          128,357          106,136
                                                   -----------------------------
                                                       908,207        1,437,996
                                                   -----------------------------
Operating loss                                        (140,395)         (27,511)

Interest and investment income                          30,944           70,948
Joint venture equity pick-up                            20,032           48,249
                                                   -----------------------------
Income (loss) before income taxes                      (89,419)          91,686
Income tax expense                                          --            2,000
                                                   -----------------------------

Net income (loss)                                  $   (89,419)     $    89,686
                                                   -----------------------------


Basic and diluted earnings per share
  Net income (loss) per common share               $    ( .00)      $       .00
                                                   =============================


            See notes to condensed consolidated financial statements.


                                  Page 4 of 15
<PAGE>

                   HYDRON TECHNOLOGIES, INC. AND SUBSIDIARIES

                 Condensed Consolidated Statements of Cash Flows
                                   (Unaudited)

                   Three Months Ended March 31, 1998 and 1997


                                                         1998           1997
                                                     ---------------------------
Operating activities:
Net cash provided (used) by operating activities     $   285,532    $  (385,010)
                                                     ---------------------------

Investing activities:
  Capital expenditures                                      (424)      (194,941)
                                                     ---------------------------
  Net cash used in
   investing activities                                     (424)      (194,941)
                                                     ---------------------------

Financing activities:
  Proceeds from issuance
   of common stock                                            --         67,500
  Cash dividends paid                                         --       (619,422)
                                                     ---------------------------
  Net cash used in
   financing activities                                       --       (551,922)
                                                     ---------------------------

Net increase (decrease) in cash
  and cash equivalents                                   285,108     (1,131,873)

Cash and cash equivalents at
  beginning of period                                  2,133,722      5,603,708
                                                     ---------------------------

Cash and cash equivalents at
  end of period                                      $ 2,418,830    $ 4,471,835
                                                     ===========================


            See notes to condensed consolidated financial statements.


                                  Page 5 of 15
<PAGE>

                     HYDRON TECHNOLOGIES, INC. AND SUBSIDIARIES

                Notes to Condensed Consolidated Financial Statements
                                    (Unaudited)

                                   March 31, 1998

Note A -- Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management of Hydron Technologies, Inc.
("HyTech"), all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. Operating results for the
three-month period ended March 31, 1998 are not necessarily indicative of the
results that may be expected for the year ending December 31, 1998. For further
information, refer to the consolidated financial statements and footnotes
thereto included in the Registrant and Subsidiaries' annual report on Form 10-K
for the year ended December 31, 1997.

Note B -- Inventories

Inventories consist of the following:
                                      March 31, 1998   December 31, 1997
                                      ----------------------------------

Finished goods                          $ 1,367,485       $ 1,731,767
Work in progress                            262,148           270,480
Raw materials and components                796,132           796,148
                                        ------------------------------
                                        $ 2,425,765       $ 2,798,395
                                        ==============================


Note C -- Investment in Joint Venture

On July 19, 1996, in conjunction with the amendment of a licensing agreement
between HyTech and QVC, Inc. ("QVC"), a partnership ("New Hydromercial
Partners") was formed between HyTech and QVC to assume the activities of a
previous joint venture, which includes the promotion and sale of HyTech's Hydron
polymer-based skin care line by means of a thirty (30) minute commercial
(Infomercial). There were no sales by HyTech to New Hydromercial Partners during
the three months ended March 31, 1998. During the three months ended March 31,
1997, HyTech had sales of approximately $9,000 to New Hydromercial Partners. The
Infomercial, in its original format, will no longer be aired and was not aired
during the three month period ended March 31, 1998. New Hydromercial Partners
continues to market to the existing Infomercial customers through a continuity
program. In April 1998, HyTech and New Hydromercial Partners entered into an
agreement with another company to test market an edited version of the
Infomercial (see Note H).

                                  Page 6 of 15
<PAGE>

                     HYDRON TECHNOLOGIES, INC. AND SUBSIDIARIES

                     Notes to Consolidated Financial Statements
                                    (Unaudited)

                                   March 31, 1998

Note D - Distribution Agreement

HyTech entered into a license agreement with QVC ("QVC License Agreement") in
1993, whereby QVC was granted exclusive rights to market and distribute HyTech's
proprietary consumer products using Hydron polymers in the Western Hemisphere.
In 1996, HyTech and QVC modified the QVC License Agreement ("Amended License
Agreement"), whereby HyTech reacquired certain retail marketing rights to the
Hydron product line. Such retail marketing rights include prestige retail
channels of distribution such as traditional department and speciality stores,
boutique stores and beauty salons, as well as catalog sales. QVC is entitled to
receive a commission from HyTech on any such sales. In addition, the Amended
License Agreement increased the minimum product purchase requirements QVC must
meet, on an annual basis over a two-year term ending May 31, 1998, to maintain
its exclusive rights to market Hydron consumer products through direct response
television in the Western Hemisphere.

On June 11, 1997, HyTech and QVC renegotiated the Amended License Agreement
("Renegotiated License Agreement") pursuant to which the term of the Amended
License Agreement was extended for one year, commencing as of June 1, 1997.

Under the terms of the Renegotiated License Agreement, QVC must meet certain
minimum product purchase requirements during each two-year term of the
agreement, including annual minimum product purchase requirements, to maintain
its exclusive rights. No obligation exists for QVC to purchase HyTech's product,
except to maintain such exclusive rights, and no assurances can be given that
QVC will meet the escalating minimum purchase levels for subsequent years in
order to maintain such exclusive rights. If QVC meets the stipulated minimum
product purchase requirements, then the Renegotiated License Agreement renews
automatically. If QVC does not meet the minimum product purchase requirements,
then HyTech can elect to continue or terminate the Renegotiated License
Agreement. HyTech does not expect QVC to meet the minimum product purchase
requirements for the current term. Accordingly, HyTech can elect to continue or
terminate the Renegotiated License Agreement. HyTech has not decided what
action, if any, it plans to take with respect to such agreement. If the
Renegotiated License Agreement terminates, HyTech may seek other marketing and
distribution arrangements for its products, which may include distribution
arrangements with QVC on a nonexclusive basis. Although management believes that
there are other avenues for selling its products, including the Hydron catalog,
the loss of QVC as a customer would have a material adverse effect on HyTech's
business.


                                  Page 7 of 15
<PAGE>

                   HYDRON TECHNOLOGIES, INC. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements
                                   (Unaudited)

                                 March 31, 1998

Note E - Income Taxes

The tax provision for the three months ended March 31, 1997 represents the
Alternative Minimum Tax due after utilization of the available net operating
loss carryforwards.

Note F - Earnings Per Share

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

                                                    Three Months Ended March 31,
                                                         1998          1997
                                                    ----------------------------
Numerator:
  Net income (loss) is both the numerator for
    basic earnings per share (income
    available to common shareholders)
    and the numerator for diluted earnings
    per share (income available to common
    shareholders after assumed conversions)         $    (89,419)   $     89,686
                                                    ============================

Denominator:
  Denominator for basic earnings per share
    (weighted-average shares)                         24,294,816      24,035,643
  Effect of dilutive securities: Stock options
    and warrants                                              --          14,429
                                                    ----------------------------

  Denominator for dilutive earnings per
    share (adjusted weighted-average)                 24,294,816      24,050,072
                                                    ============================

Basic earnings per share                            $       (.00)   $        .00
                                                    ============================

Diluted earnings per share                          $       (.00)   $        .00
                                                    ============================


Options and warrants to purchase 963,500 shares of common stock were outstanding
at March 31, 1998, but were not included in the computation of diluted earnings
per share because the effect would be antidilutive to the net loss per share for
the period.


                                  Page 8 of 15
<PAGE>

                   HYDRON TECHNOLOGIES, INC. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements
                                   (Unaudited)

                                 March 31, 1998

Note G - Contingencies

On September 30, 1997, Harvey Tauman, formerly Chairman, Chief Executive
Officer, President and Treasurer of HyTech, whose employment was terminated by
HyTech on September 19, 1997, commenced an action (the "Action") against HyTech
in the Circuit Court of the Fifteenth Judicial District in and for Palm Beach
County, Florida. In his complaint in the Action, Mr. Tauman alleges that HyTech
breached his employment contract upon the termination of his employment and
seeks damages of not less than $4,000,000, plus interest and costs. Mr. Tauman
also seeks a declaration that his employment was terminated without cause and
that he may continue to exercise his stock options for the duration of their
term notwithstanding the termination of his employment.

On November 4, 1997, HyTech served and filed its answer to the complaint in the
Action and asserted counterclaims against Mr. Tauman seeking various relief
against him including an award of compensatory and punitive damages of not less
than $6,000,000, together with appropriate interest, costs and expenses. In its
counterclaims, HyTech seeks a declaration, among other things, that Mr. Tauman
breached his employment agreement as a result of wrongful and fraudulent
performance of his duties under the contract. Among other allegations, HyTech
contends in its counterclaims that Mr. Tauman improperly caused HyTech to make
payments of personal expenses upon the submission by Mr. Tauman of false expense
reports and receipts, caused HyTech improperly to enter into consulting
agreements with members of his family and with friends without Board approval,
misrepresented to the Board the financial condition of HyTech and its prospects
in order to obtain a grant to himself of bonuses and stock options to which he
would otherwise not have been entitled, caused the submission to the Board of
false projections of HyTech's revenues in order to cause the Board to declare
dividends of which he was a substantial recipient and to approve a share
repurchase plan, caused HyTech to pay for accounting services rendered to him
and to other members of his family, and intentionally breached his fiduciary
duties to HyTech.

Management is unable, at this time, to estimate the likelihood or scope of
liability, if any, it may incur as a result of Mr. Tauman's claims or the
likelihood of success of its counterclaims.


                                  Page 9 of 15
<PAGE>

                   HYDRON TECHNOLOGIES, INC. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements
                                   (Unaudited)

                                 March 31, 1998

Note H - Subsequent Events

In April 1998, HyTech, New Hydromercial Partners and Guthy-Renker Corporation
("GRC") entered into an agreement, whereby GRC will edit and test market the
30-minute Hydron skincare infomercial previously produced by New Hydromercial
Partners (see Note C). Under the terms of the agreement, HyTech and GRC will
share equally in the cost of re-editing the original infomercial. HyTech shall
be reimbursed for such reediting expenses upon determination of the success of
the test marketing. GRC, at its own expense, will test market the edited
infomercial on regional broadcast and cable networks nationwide for a period of
six to nine months in order to evaluate product sales and re-order rates.

If the test marketing is successful, New Hydromercial Partners will be
reimbursed, by GRC, a portion of the cost of producing the original infomercial.
GRC will then receive an exclusive license to distribute HyTech products in
North America through infomercials, short form commercials, database marketing
(excluding current databases), package inserts, space advertising and credit
card syndication, subject to certain escalating minimum product and media
purchases. GRC will also have non-exclusive rights to sell Hydron products
internationally. GRC is specifically excluded from selling Hydron products
through television shopping channels and mass retail. GRC will purchase certain
products from HyTech to be sold to consumers via television, and will purchase
additional non-televised products on a consignment basis.

Upon completion of successful test marketing, HyTech will grant GRC an option to
purchase up to 100,000 shares of HyTech's common stock at an exercise price
equal to the then current market value. Such option will only be exercisable if
GRC meets certain product and media purchase requirements, at the conclusion of
the first 12-month period following the test market. The option is exercisable
for a period of 5 years. At the conclusion of the first and second year periods,
HyTech will grant GRC options to purchase up to an additional 250,000 and
150,000 shares, respectively, under similar terms and conditions.


                                    10 of 15
<PAGE>

Item 2. Management's Discussion and Analysis of Financial Condition and Results
        of Operations

Business

Hydron Technologies, Inc. ("HyTech") markets a broad range of consumer and oral
health care products using Hydron(R) polymers, a scientifically-proven moisture
attracting ingredient, and also owns a non-prescription drug delivery system for
topically applied pharmaceuticals, which uses such polymer. HyTech holds U.S.
and international patents on the only known means to suspend the Hydron polymer
in a stable emulsion that is cosmetically acceptable for use in personal
care/cosmetic products, thereby creating a new moisturizing technology for the
personal care/cosmetic and pharmaceutical industries. HyTech sells specialty
personal care/cosmetic products, and to a lesser extent oral health care
products, most of which are covered by patent, license and royalty agreements.
HyTech has entered into a License Agreement with QVC, Inc. ("QVC"), as amended
(the "Amended QVC License Agreement"), which gives QVC certain exclusive rights
to purchase licensed products from HyTech for sale in the Western Hemisphere. In
addition, HyTech has entered into a license agreement with National Patent
Development Corp. ("National Patent"), which provides for reciprocal royalty
payments based on the sale of certain of each party's products. HyTech is
developing other personal care/cosmetic products for consumers using Hydron
polymers. HyTech also uses its patented technology as a drug delivery system in
proprietary products, in which Hydron polymers act as a drug release mechanism.
HyTech intends to continue to explore the efficacy of using its technology for
such purposes and would, when appropriate, either seek licensing arrangements
with third parties, or develop and market proprietary products through its own
efforts.

Substantially all of HyTech's net sales are derived from sales to QVC under the
Renegotiated License Agreement. Pursuant to the Renegotiated License Agreement,
if QVC fails to meet the stipulated minimum product purchase requirements at the
May 31, 1998 measurement date, HyTech alone can elect to continue or terminate
the agreement. HyTech believes that QVC will not meet such stipulated minimums
prior to May 31, 1998 and has not decided what actions, if any, it plans to take
under such circumstances.

Results of Operations

Net sales for the three months ended March 31, 1998 were $1,311,218, a decrease
of $1,096,986, or 46%, from net sales of $2,408,204 for the three months ended
March 31, 1997. This decrease is attributable in part to an 18% decrease in
retail sales of Hydron products sold by QVC during the same periods, and to the
sale and delivery in March 1997 of $600,000 in products featured as a special
promotion by QVC in April 1997. There were no similar sale and delivery of
special promotion products during the three months ended March 31, 1998.

Approximately 80% and 85% of HyTech's sales during the three months ended March
31, 1998 and 1997, respectively, were to QVC and its related entities.
Management anticipates that sales to QVC will continue to be a substantial
percentage of HyTech's sales and, absent the consummation of marketing or
distribution arrangements with third parties other than QVC, HyTech's dependence
upon QVC as a substantial customer will remain significant. Any disruption in
HyTech's relationship with QVC would have a material adverse effect on the
business, financial condition and results of operations of HyTech.

                                    11 of 15
<PAGE>

Results of Operations (continued)

HyTech's gross profit margin for the three months ended March 31, 1998 remained
at 59%, the same gross profit margin for the three months ended March 31, 1997.
The gross profit margins on sales to QVC and related entities, was 56% and 55%
for the three months ended March 31, 1998 and 1997, respectively. The gross
profit margins on HyTech's catalog ("Catalog") sales were 71% and 80% for the
three months ended March 31, 1998 and 1997, respectively. The decrease in
Catalog related gross profit margin relates to a one-time sale of approximately
$73,000 at a 44% gross profit margin during the three months ended March 31,
1998.

Research and development ("R&D") expenses reflect HyTech's efforts to identify
new product opportunities, develop and package the products for commercial sale,
perform appropriate efficacy and safety tests, and conduct consumer panel
studies and focus groups. R&D expenses for the three months ended March 31, 1998
were $118,329, an increase of $37,686, or 47%, from R&D expenses of $80,643 for
the three months ended March 31, 1997. This increase is the result primarily of
approximately $50,000 in clinical studies performed on various products during
the three months ended March 31, 1998. No such clinical studies were performed
during the three months ended March 31, 1997. The amount of R&D expenses per
year varies, depending on the nature of the development work during each year,
as well as the number and type of products under development at such time.

Selling, general and administrative ("SG&A") expenses for the three months ended
March 31, 1998 were $605,627, a decrease of $524,626, or 46%, from SG&A expenses
of $1,130,253 for the three months ended March 31, 1997. This decrease is
attributable primarily to reduced promotional activity involving the Catalog.
Total Catalog SG&A expenses for the three months ended March 31, 1998 were
$115,160, a decrease of $379,165, or 77%, from Catalog SG&A expenses of $494,325
for the three months ended March 31, 1997. Non-catalog SG&A expenses for the
three months ended March 31, 1998 were $490,467, a decrease of $145,461, or 23%,
from non-catalog SG&A expenses of $635,928 for the three months ended March 31,
1997. The decrease in non-catalog SG&A expenses was the result primarily of
decreased payroll expense.

Interest and investment income for the three months ended March 31, 1998 was
$30,944, a decrease of $40,004, or 56%, from interest and investment income of
$70,948 for the three months ended March 31, 1997. This decrease is due
primarily to lower cash balances. HyTech maintains a conservative investment
strategy, deriving investment income primarily from U.S. Treasury securities.

The joint venture equity pick-up for the three months ended March 31, 1998 was
$20,032, a decrease of $28,217, or 58%, from the joint venture equity pick-up of
$48,249 for the three months ended March 31, 1997. This equity pick-up
represents HyTech's proportionate share of New Hydromercial Partner's net income
for the same period.


                                    12 of 15
<PAGE>

Results of Operations (continued)

The net loss for the three months ended March 31, 1998 was ($89,419), as
compared to net income of $89,686 for the three months ended March 31, 1997.
This decrease was the result primarily of the factors discussed above. The net
loss for the three months ended March 31, 1998 includes a net profit from
Catalog operations of $49,993 and a net loss from non-catalog operations of
($139,412). The net income for the three months ended March 31, 1997 includes a
net loss of ($235,556) from Catalog operations and a net profit from non-catalog
operations of $325,242.

Liquidity and Financial Resources

HyTech's overall financial condition remains strong as reflected in the
Condensed Consolidated Balance Sheets at March 31, 1998 and December 31, 1997.
Working capital at March 31, 1998 and December 31, 1997 was approximately $4.8
million and $4.7 million, respectively, including cash and cash equivalents of
approximately $2.4 million and $2.1 million, respectively. HyTech's increase in
cash and cash equivalents was the result primarily of cash flow from operations
of approximately $286,000.

Investing activities used $424 and $194,941 for the three months ended March 31,
1998 and 1997, respectively. The investing activities during the three months
ended March 31, 1997 consisted primarily of leasehold improvements for the
expansion of HyTech's administrative offices.

There were no financing activities during the three months ended March 31, 1998.
Financing activities for the three months ended March 31, 1997 of $551,922
related primarily to the payment of dividends. The payment of dividends were
suspended by the Board of Directors in September 1997. The payment of dividends
in the future will be determined by the Board of Directors in light of
conditions then existing, including HyTech's earnings and financial condition.

Based on HyTech's present cash position, absence of any short or long term debt,
arrangements with third parties for contractual manufacturing and R&D, and
HyTech's present business strategy, management believes that HyTech has adequate
resources to meet normal, recurring obligations as they become due. Further, in
view of the thirty day payment terms in connection with sales to QVC, management
does not anticipate any difficulty in financing foreseeable inventory
requirements. However, since sales to QVC represent approximately 80% of
HyTech's net sales for the three months ended March 31, 1998, termination of the
Renegotiated License Agreement or any significant reduction in the volume of
sales to QVC would have a material adverse effect on HyTech's business,
financial condition and results of operations.

HyTech does not have the financial resources to sustain a national advertising
campaign to market its products in a conventional retail mode. In view of the
foregoing, management's strategy has been to enter into marketing, licensing and
distribution agreements with third parties (such as QVC and New Hydromercial
Partners) which have greater financial resources than those of HyTech and that
can enhance HyTech's product introductions with appropriate national marketing
support programs.


                                    13 of 15
<PAGE>

Liquidity and Financial Resources (continued)

HyTech has determined that it will need to modify or replace certain portions of
its software so that its computer systems will function properly with respect to
dates in the Year 2000 and beyond. Management does not expect that this project
will have a significant effect on operations. While HyTech believes its planning
efforts are adequate to address its Year 2000 concerns, there can be no
guarantee that the systems of other companies on which HyTech's systems and
operations rely will be converted on a timely basis and will not have a material
effect on HyTech. The cost of the Year 2000 initiatives is not expected to be
material to HyTech's results of operations or financial position.

The effect of inflation has not been significant upon either the operations or
financial condition of HyTech.

Cautionary Statement Regarding Forward Looking Statements

The statements contained in this Report on Form 10-Q that are not purely
historical are 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, including statements regarding HyTech's expectations, hopes, intentions,
beliefs or strategies regarding the future. Forward looking statements include
HyTech's liquidity, anticipated cash needs and availability, and the anticipated
expense levels under the heading "Management's Discussion and Analysis of
Financial Condition and Results of Operations." All forward looking statements
included in this document are based on information available to HyTech on the
date of this Report, and HyTech assumes no obligation to update any such forward
looking statement. It is important to note the HyTech's actual results could
differ materially from those expressed or implied in such forward looking
statements. You should also consult HyTech's Annual Report on Form 10-K for the
year ended December 31, 1997 as well as those factors listed from time to time
in HyTech's other reports filed with the Securities and Exchange Commission
pursuant to the Securities Exchange Act of 1934 and the Securities Act of 1933.



                           Part II - Other Information

Item 1. Legal Proceedings
   See Note G to "Notes to Consolidated Financial Statements"

Item 5. Other Information
   See Note H to "Notes to Consolidated Financial Statements"

Item 6.  Exhibits and Reports on Form 8-K
   None


                                    14 of 15
<PAGE>

                                   SIGNATURES


Pursuant to the requirements 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.



                                                HYDRON TECHNOLOGIES, INC.



                                                By: /s/ Thomas G. Burns
                                                    -----------------------
                                                Thomas G. Burns
                                                Vice President, Finance and
                                                Chief Financial Officer



Dated:  May 12, 1998


                                    15 of 15