<PAGE>


                     U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                   Form 10-QSB


|X| QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
    ACT OF 1934

    For the quarterly period ended          March 31, 1999         .
                                   --------------------------------

|_| TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
    OF 1934

For the transition period from ______________ to ______________.

                         Commission file number 0-19827
                                                -------

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

           Delaware                                           22-3279252
(State or other jurisdiction of                            (I.R.S. Employer
incorporation or organization)                             Identification No.)

                    2245 Route 130, Dayton, New Jersey 08810
          (Address of principal executive offices, including zip code)

       Registrant's telephone number, including area code: (732) 274-2288

Check whether the registrant (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 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  X  No 
                                      ---    ---

State the number of shares outstanding of each of the registrant's classes of
common stock, as of the latest practicable date.

      Class                                   Outstanding as of April 30, 1999
      -----                                   --------------------------------

     Common                                             5,713,500

Transitional Small Business Disclosure Format (Check one): Yes     No  X
                                                               ---    ---

<PAGE>

                         HYMEDIX, INC. AND SUBSIDIARY

                                      INDEX


                                                                        Page No.
                                                                        --------

PART I  - FINANCIAL INFORMATION

          Item 1.  Financial Statements

                   Consolidated Balance Sheets as of March 31, 1999
                   and December 31, 1998.                                   3

                   Consolidated Statements of Operations for the
                   Three Months Ended March 31, 1999 and March 31, 1998.    4

                   Consolidated Statements of Stockholders' Equity for the
                   Three Months Ended March 31, 1999.                       5

                   Consolidated Statements of Cash Flows for the
                   Three Months Ended March 31, 1999 and March 31, 1998.    6

                   Notes to Interim Consolidated Financial Statements       7

          Item 2.  Management's Discussion and Analysis of Financial
                   Condition and Results of Operations                      9

PART II - OTHER INFORMATION

          Item 3.  Defaults Upon Senior Securities                         13

          Item 6.  Exhibits and Reports on Form 8-K                        14


SIGNATURES                                                                 15

                                      - 2 -

<PAGE>



PART I - FINANCIAL INFORMATION
ITEM 1.      FINANCIAL STATEMENTS

                          HYMEDIX, INC. AND SUBSIDIARY
                           Consolidated Balance Sheets

                                     ASSETS
<TABLE>
<CAPTION>
                                                                              March 31,        December 31,
                                                                                1999               1998
                                                                            ------------       ------------
<S>                                                                         <C>                <C>
                                                                            (Unaudited)
CURRENT ASSETS:
     Cash and cash equivalents                                              $     23,799       $     25,336
     Accounts receivable                                                         213,756                217
     Inventories, net                                                            164,226            162,546
     Other current assets                                                        116,682            103,454
                                                                            ------------       ------------
         Total current assets                                                    518,463            291,553

PROPERTY AND EQUIPMENT, NET                                                        1,838              5,255
PATENTS, NET                                                                      54,217             62,077

SECURITY DEPOSIT                                                                  59,040             59,040
                                                                            ------------       ------------
         Total assets                                                       $    633,558       $    417,925
                                                                            ------------       ------------
                                                                            ------------       ------------

                      LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
     Notes payable                                                          $  4,046,979       $  4,067,979
     Accounts payable and accrued expenses                                     3,855,167          3,656,599
     Accrued legal judgment and settlement                                       384,167            367,500
     Deferred revenue                                                             93,750                  0
                                                                            -------------       ------------
         Total current liabilities                                             8,380,063          8,071,078
                                                                            -------------       ------------
ACCRUED LEGAL SETTLEMENT                                                         183,333            200,000
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' DEFICIT:
     8% Senior Convertible Preferred Stock, $3.00 par value, 800,000 shares
         authorized, 10,190 shares issued and outstanding                         30,570             30,570
     Preferred Stock, $.01 par value, 3,000 shares authorized,
         150 shares issued and outstanding                                             2                  2
     Common Stock, $.001 par value, 20,000,000 shares
         authorized, 5,713,500 shares issued and outstanding                       5,713              5,713
     Additional paid-in capital                                               15,646,474         15,646,474
     Accumulated deficit                                                     (22,112,597)       (22,035,912)
     Subscription receivable                                                  (1,500,000)        (1,500,000)
                                                                            --------------     --------------
         Total stockholders' deficit                                          (7,929,838)        (7,853,153)
                                                                            --------------     --------------
         Total liabilities and stockholders' deficit                        $    633,558       $    417,925
                                                                            ------------       ------------
                                                                            ------------       ------------
</TABLE>

             The accompanying notes to interim consolidated financial statements
                 are an integral part of these consolidated balance sheets.

                                      - 3 -

<PAGE>

                          HYMEDIX, INC. AND SUBSIDIARY

                      Consolidated Statements of Operations
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                Three Months Ended
                                                                                     March 31,
                                                                            --------------------------
                                                                               1999            1998
                                                                            ----------      ----------
<S>                                                                         <C>             <C>       
REVENUES:

     Net product sales                                                      $  247,862      $  369,048 
     License, royalty and distribution fees                                     65,954          54,050 
     Research and development contracts                                         41,250          93,750 
                                                                            ----------      ---------- 
         Total revenues                                                        355,066         516,848 
                                                                            ----------      ---------- 
                                                                                                       
COSTS AND EXPENSES:                                                                                    
                                                                                                       
     Cost of sales                                                              86,616         174,114 
     Selling, general and administrative                                       282,156         261,265 
     Research and development                                                  112,490         121,330 
     Reversal of legal judgment                                                      0        (438,464)
                                                                            ----------      ---------- 
         Total costs and expenses                                              481,262         118,245 
                                                                            ----------      ---------- 
         (loss) Income from operations                                        (126,196)        398,603 
                                                                            ----------      ---------- 
                                                                                                       
OTHER (EXPENSE) INCOME                                                                                 
     Interest expense                                                          (74,849)        (19,575)
     Interest income                                                                 0              10 
     Other income                                                              124,360               0 
                                                                            ----------      ---------- 
              Total other income (expense)                                      49,511         (19,565)
                                                                            ----------      ---------- 
                                                                                                       
         Net income (loss)                                                  $  (76,685)     $  379,038 
                                                                            ----------      ---------- 
                                                                                                       
BASIC (LOSS) INCOME PER COMMON SHARE                                        $    (0.02)     $     0.06 
                                                                            ----------      ---------- 
                                                                            ----------      ---------- 
                                                                                                       
DILUTED (LOSS) INCOME PER COMMON SHARE                                           (0.02)     $     0.05 
                                                                            ----------      ---------- 
                                                                            ----------      ---------- 
                                                                                                       
WEIGHTED AVERAGE COMMON                                                                                
   SHARES OUTSTANDING                                                        5,713,500       5,713,500 
                                                                            ----------      ---------- 
                                                                            ----------      ---------- 
                                                                                                       
DILUTED AVERAGE COMMON                                                                        
   SHARES OUTSTANDING                                                        5,713,500       6,731,384 
                                                                            ----------      ---------- 
                                                                            ----------      ---------- 
</TABLE>

             The accompanying notes to interim consolidated financial statements
                 are an integral part of these consolidated balance sheets.

                                      - 4 -

<PAGE>

                          HYMEDIX, INC. AND SUBSIDIARY

                 Consolidated Statement of Stockholders' Deficit
                    For The Three Months Ended March 31, 1999
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                                    
                                                                                                    
                                                 8% Senior                                          
                                                 Convertible                             Additional 
                                 Comprehen-       Preferred     Preferred      Common     Paid-in   
                                 sive Income       Stock         Stock         Stock      Capital   
                                 -----------     -----------    ---------      ------    ---------- 
<S>                                 <C>            <C>             <C>         <C>       <C>        
BALANCE AT DECEMBER 31, 1998                       $30,750         $2          $5,713    $15,646,474
Comprehensive loss:
    First Quarter 1999:
         Net loss                   $(76,685)                                                        
                                    --------
Comprehensive loss                  $(76,685)
                                    ========
                                                   -------          --         ------    -----------
BALANCE AT MARCH 31, 1999                          $30,750          $2         $5,713    $15,646,474
                                                   =======          ==         ======    ===========
</TABLE>


<TABLE>
<CAPTION>
                                                                 
                                                                 
                                                                   Total
                                                                   Stock-
                                Accumulated      Subscription     holders'
                                  Deficit         Receivable       Deficit
                                -----------      ------------    -----------
<S>                            <C>                <C>            <C>         
BALANCE AT DECEMBER 31, 1998   $(22,035,912)      $(1,500,000)   $(7,853,153)
Comprehensive loss:
    First Quarter 1999:
         Net loss                   (76,685)                         (76,685)

Comprehensive loss             
                               
                                -----------        ----------     ----------
BALANCE AT MARCH 31, 1999      ($22,112,597)      ($1,500,000)   ($7,929,838)
                                ===========        ==========     ==========
</TABLE>

             The accompanying notes to interim consolidated financial statements
                 are an integral part of these consolidated balance sheets.

                                      - 5 -

<PAGE>



                          HYMEDIX, INC. AND SUBSIDIARY

                      Consolidated Statements of Cash Flows
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                         Three Months Ended
                                                                                             March 31,
                                                                                      ------------------------
                                                                                         1999           1998
                                                                                      ---------      ---------
<S>                                                                                   <C>            <C>      
CASH FLOWS FROM OPERATING ACTIVITIES:
               Net (loss) income                                                      $ (76,685)     $ 379,038 
                                                                                      ---------      --------- 
                                                                                                               
               Adjustments to reconcile net (loss) income  to net cash (used in)
                    provided by operating activities:
                        Depreciation and amortization                                    11,277         14,267 
                        (Increase) decrease in:                                                                
                             Accounts receivable                                       (213,539)        22,858 
                             Inventories, net                                            (1,680)        80,499 
                             Other current assets                                       (13,228)        (1,441)
                                                                                                               
                        Increase (decrease) in:                                                                
                             Accounts payable and accrued expenses                      198,568        (96,451)
                             Accrued legal judgment                                           0       (438,464)
                             Deferred revenue                                            93,750         93,750 
                                                                                      ---------      --------- 
                                 Total adjustments                                       75,148       (324,982)
                                                                                      ---------      --------- 
                                 Net cash (used in) provided by                                                
                                   operating activities                                  (1,537)        54,056 
                                                                                                               
CASH FLOWS FROM FINANCING ACTIVITIES:                                                                          
               Principal payments of notes payable                                             0       (20,617)
                                                                                       ---------      ---------
               Net cash (used in) financing activities                                         0       (20,617)
                                                                                       ---------     --------- 
                    Net (decrease) increase in cash and cash equivalents                  (1,537)       33,439 
                                                                                                               
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                                            25,336        51,381 
                                                                                       ---------     --------- 
                                                                                                               
CASH AND CASH EQUIVALENTS, END OF PERIOD                                               $  23,799     $  84,820 
                                                                                       =========     ========= 
</TABLE>

             The accompanying notes to interim consolidated financial statements
                 are an integral part of these consolidated balance sheets.

                                                                 - 6 -

<PAGE>



                          HYMEDIX, INC. AND SUBSIDIARY

               Notes to Interim Consolidated Financial Statements


1.   MERGER AND REINCORPORATION

          HYMEDIX, Inc. (the "Company") was incorporated in Delaware on December
     20, 1993, as a wholly-owned subsidiary of Servtex International Inc. (the
     "Predecessor"). On February 23, 1994, the Predecessor merged with and into
     HYMEDIX, Inc., and, concurrently, a wholly-owned subsidiary of the
     Predecessor was merged with and into HYMEDIX International, Inc. ("HYMEDIX
     International"), a privately-held Delaware corporation, which resulted in
     HYMEDIX International becoming a wholly-owned subsidiary of HYMEDIX, Inc.
     HYMEDIX International was incorporated in October, 1985 under the name
     Kingston Technologies, Inc.

          The unaudited consolidated financial statements have been prepared
     based upon financial statements of HYMEDIX, Inc. and its wholly owned
     subsidiary, HYMEDIX International, Inc.


2.   INTERIM FINANCIAL STATEMENTS

          In the opinion of management, the accompanying consolidated financial 
     statements of the Company reflect all adjustments, consisting of normal 
     recurring accruals, necessary to present fairly, in all material respects,
     the Company's financial position as of March 31, 1999 and December 31, 1998
     and the results of operations and cash flows for the three months ended 
     March 31, 1999 and 1998. The results of operations for interim periods are 
     not necessarily indicative of the results to be expected for an entire 
     fiscal year.


3.   COMPREHENSIVE INCOME

     In June 1997, the Financial Accounting Standards Board issued SFAS No. 
130, "Reporting Comprehensive Income" ("SFAS 130"). SFAS 130 requires the 
display of comprehensive income and its components in the financial 
statements. The Company adopted SFAS 130 on January 1, 1998. There were no 
items affecting comprehensive for the three months ended March 31, 1999.

                                      - 7 -

<PAGE>


4. EARNINGS (LOSS) PER SHARE

     In the fourth quarter of 1997, the Company adopted Statement of 
Financial Accounting Standards No. 128, "Earnings Per Share," (SFAS 128), 
which requires presentation in the consolidated statements of operations of 
both basic and diluted earnings per share. The computation of both basic and 
diluted earnings per share were as follows:

<TABLE>
<CAPTION>
                                                                                   Three Months Ended
                                                                                        March 31,
                                                                                ---------      ----------
                                                                                   1998           1997
                                                                                ---------      ----------
<S>                                                                             <C>            <C>        
Numerator:
   Net (loss) income less preferred dividends
     of $34,361 for the period                                                 $ (111,046)     $ 344,677
                                                                                                        
Denominator:                                                                                            
   Weighted average common shares outstanding                                   5,713,500      5,713,500
                                                                               ----------      ---------
BASIC (LOSS) INCOME PER COMMON SHARE                                               $(0.02)         $0.06
                                                                               ----------      ---------
                                                                               ----------      ---------
Numerator:                                                                                              
   Net (loss) income less preferred dividends                                                           
     of $34,361 for the three month periods                                      (111,046)       344,677
   Interest on Convertible Bonds for the period                                       (A)         17,509
                                                                               ----------      ---------
              Subtotal                                                           (111,046)       362,246
                                                                               ----------      ---------
                                                                                                        
Denominator:                                                                                            
   Weighted average common shares outstanding                                    5,713,50      5,713,500
   Common shares that would be issued in exchange                                                       
     for the Convertible Bonds assuming conversion                                                      
     at the beginning of the period                                                (A)         1,017,884
                                                                               ----------      ---------
              Subtotal                                                          5,713,500      6,731,384
                                                                               ----------      ---------
DILUTED (LOSS) INCOME PER COMMON SHARE                                             $(0.02)         $0.05
                                                                               ----------      ---------
                                                                               ----------      ---------
</TABLE>

(A) None of the common shares issuable under the Company's stock option plan, 
upon conversion of the preferred stock and convertible bonds or through the 
outstanding warrants were included in the above earnings per share 
calculations because their inclusion would be anti-dilutive for the three 
months ended March 31, 1999.

                                      - 8 -

<PAGE>

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

              This report contains forward-looking statements within the meaning
         of Section 27A of the Securities Act of 1933 and Section 21E of the
         Securities Exchange Act of 1934. Actual results could differ materially
         from those projected in the forward-looking statements as a result of
         the risk factors set forth below. The industry in which the Company
         competes is characterized by rapid changes in technology and frequent
         new product introductions. The Company believes that its long-term
         growth depends largely on its ability to continue to enhance existing
         products and to introduce new products and technologies that meet the
         continually changing requirements of customers. While the Company has
         devoted significant resources to the development of new products and
         technologies, there can be no assurance that it can continue to
         introduce new products and technologies on a timely basis or that
         certain of its products and technologies will not be rendered
         noncompetitive or obsolete by its competitors.

OVERVIEW

         HYMEDIX, Inc. ("HYMEDIX") was incorporated in Delaware on December 
20, 1993 as a wholly-owned subsidiary of Servtex International Inc. (the 
"Predecessor"). On February 23, 1994, the Predecessor merged with and into 
HYMEDIX, Inc. and, concurrently, a wholly-owned subsidiary of the Predecessor 
was merged with and into HYMEDIX International, Inc. ("HYMEDIX 
International") which resulted in HYMEDIX International becoming a 
wholly-owned subsidiary of HYMEDIX. As used in this Form 10-QSB, unless the 
context otherwise requires, the term "Company" collectively means HYMEDIX, 
HYMEDIX International and their respective predecessors. HYMEDIX 
International was incorporated in October, 1985 under the name Kingston 
Technologies, Inc.

RESULTS OF OPERATIONS

REVENUES

         The Company's total revenues for the three months ended March 31, 
1999 were $355,066, versus $516,848 for the same period in 1998, a decrease 
of $161,782 or 31.3%. This decrease in revenues resulted mainly from (1) 
decreased sales of $194,512 in net sales of hydrogels; (2) a decrease of 
$52,500 in research and development contract revenues, offset by (3) an 
increase of $11,904 in license, royalty and distribution fees, and (4) 
increased sales of $73,326 in domestic and international sales of skin care 
products. The decrease in net sales of hydrogels is primarily attributable to 
an overstock in inventory by one of the Company's large customers at the end 
of 1998.

COSTS AND EXPENSES

         Cost of sales for the three months ended March 31, 1999 was $86,616, 
versus $174,114 for the same period in 1998, a decrease of $87,498 or 50.3%. 
This decrease in cost of sale was attributable to the 32.8% decrease in net 
product sales offset by the lower costs due to product mix. Selling, general 
and administrative expenses increased by $20,891 or 8.0% to $282,156 for the 
three months ended March 31, 1999 from $261,265 for the same period of 1998. 
The increase was primarily due to higher employee related and premises 
expenses. The research and development costs for the three months ended March 
31, 1999 were $112,490 as compared to $121,330 for the same period in 1998, a 
decrease of $8,840 or 7.3%, mainly due to lower outside consulting costs and 
a decrease in license maintenance fees.

                                      - 9 -

<PAGE>

LEGAL JUDGMENT

         During the first quarter of 1998, a legal judgment that was 
previously accrued for was partially reversed on appeal. Based upon the 
appeal, the Company reversed $438,464 of the accrued legal judgment along 
with the related accrued interest charges.

OTHER (EXPENSE) INCOME, NET

         Total other (expense) income, increased by $69,076 to $49,511 for 
the three month period ended March 31, 1999, versus an expense of $14,565 for 
the same period in 1998 mainly attributable to a $124,360 collection of a 
receivable previously written off by the Company in a prior year, offset by a 
$55,274 increase in interest expense from the previous year, which primarily 
resulted from the reversal of approximately $48,000 of interest accrued 
related to the legal judgment in the first quarter of 1998.

         As a result of the reversal of the legal judgment in the previous 
year, the decreased revenues described above for the three months ended March 
31, 1999 as compared to the same period of the prior year and the increased 
expenses described above for the same period of 1999 versus the prior year, 
the Company incurred a net loss of $76,685 for the three months ended March 
31, 1999, as compared to the net income of $379,038 for the same period in 
1998.

LIQUIDITY, CAPITAL RESOURCES AND CHANGES IN FINANCIAL CONDITION

         The Company had $23,799 in cash on hand on March 31, 1999 versus 
$25,336 on December 31, 1998. The working capital deficit of $(7,861,600) on 
March 31, 1999 represents an increase of $82,075 from the 1998 year-end 
deficit level of $(7,779,525). The increase in working capital deficit was 
primarily attributable to the net loss incurred in the three-month period 
ended March 31, 1999.

         The Company's two term loans, advanced to the Company by licensees 
pursuant to license agreements, in the principal amounts of $1,500,000 and 
$1,000,000, respectively, each have been classified as current liabilities as 
they are in technical default as a result of certain interest payments that 
have not been made.

         During the first quarter of 1996, the Company issued a convertible 
bond in the principal amount of $150,000 (the "September Bond") pursuant to a 
Convertible Bond Purchase Agreement effective March 5, 1996, by and among the 
Company, HYMEDIX International and Su Chen Huang. The September Bond bears 
interest at a rate of 7% per annum and matured (after being extended) on 
March 31, 1998. The Company is negotiating to extend the due date of the 
bond. The September Bond is convertible in whole at any time prior to payment 
or prepayment into one hundred fifty thousand (150,000) shares of common 
stock of the Company. Interest on the September Bond is payable at maturity 
or upon prepayment or conversion thereof.

         In April of 1996, the Company issued convertible bonds in the 
aggregate principal amount of approximately $981,000 (the "June Bonds") 
pursuant to a Convertible Bond Purchase Agreement effective February 27, 
1996, by and among the Company, HYMEDIX International, First Taiwan 
Investment and Development, Inc. and the Purchasers (as defined therein). The 
June Bonds bear interest at a rate of 7% per annum and matured (after being 
extended) on March 31, 1998. The Company is negotiating to extend the due 
date of the bond. The June Bonds are convertible in whole or in part at any 
time prior to payment or prepayment into one thousand (1,000) shares of 
common stock of the Company for each one thousand dollars ($1,000) of 
principal amount outstanding. Interest on the June Bonds is payable at 
maturity or upon prepayment or conversion thereof.

                                     - 10 -

<PAGE>

         Both the June Bonds and the September Bond are structured in such a 
way as to permit the Company, subject to certain terms and conditions, 
including approval of the Bondholders (as hereinafter defined), to make 
withdrawals from a special account (the "Special Account") up to the 
principal amount of the bonds on a periodic basis and to require the Company 
to reduce the amount withdrawn with respect to the Special Account by making 
payments into the Special Account. As of March 31, 1999, the Company had made 
various withdrawals from and repayments to the Special Account.

         Pursuant to a Security Agreement dated as of August 8, 1996, by and 
among the Company and the Bondholder Representative (as defined therein), in 
order to induce the Purchasers and Su Chen Huang (collectively, the 
"Bondholders") to approve future withdrawals by the Company from the special 
account, the Company granted to the Bondholder Representative, for the 
ratable benefit of the Bondholders, a security interest in all of the 
Company's assets and properties.

         In June of 1997, the Company received a payment of a $100,000 
refundable deposit from a potential distributor with whom the Company has 
reached an agreement in principle regarding certain aspects of the Company's 
consumer skin care business. The Company has agreed to grant the distributor 
an option to negotiate an agreement with the Company with respect to the 
Company's skin care product in certain territories or to match the terms of 
any such agreement that the Company may negotiate with a third party, on a 
right-of-first refusal basis. This option expires on the earlier of June 30, 
2001 or the date on which the Company reaches any such third party agreement. 
The $100,000 deposit would be refundable to the distributor in the event any 
such third party agreement is consummated or creditable against amounts 
payable under any definitive agreement between the Company and this 
distributor. This option is subject to negotiation and execution of a 
definitive agreement regarding this matter.

         Management believes that the Company will have adequate resources to 
finance its operations in 1999. On April 29, 1998 the appellate court 
reversed $438,464 of the legal judgment against the Company but affirmed the 
remaining $367,500 against the Company. If the Plaintiff moves to collect on 
the judgment, the Company must attempt to finance both its operations and 
satisfaction of the judgment. Management believes this will be difficult. In 
addition, the Company's secured convertible bonds are both past due, and 
while the Company is managing to make some payments on past due interest and 
principal, there is no assurance that sufficient funds will be available to 
the Company to service these debts and to continue its operations. Management 
plans to continue to seek and evaluate financing alternatives for the 
Company. In the event that cash flow from operations and the anticipated 
proceeds from the financing, if any, are not sufficient to fund the Company's 
operations in 1999, there is no assurance that other sources of funds will be 
available to the Company.

YEAR 2000 COMPLIANCE

         The Company's current information and computer systems will be 
affected by the Year 2000 issue ("Y2K"), which refers to the inability of 
computerized systems to process dates beyond December 31, 1999. The Company 
is formulating a Y2K Plan to address the Company's Y2K issues. Based on its 
current assessments from the Y2K Plan, the Company does not expect at present 
that it will experience a disruption of its operations as a result of the 
change to the new millennium.

         Based upon a preliminary review of systems, the Company estimates 
that the total cost of achieving Y2K readiness for the Company's internal 
systems and equipment will be less than $10,000. Since no significant issues 
have arisen based on the Company's preliminary assessments, the Company has 
not yet developed a contingency plan to address any material Y2K issues. A 
contingency plan, if required, will be developed immediately upon completion 
of the Company's assessment.

                                     - 11 -

<PAGE>

         The Company is assessing the state of readiness of its major 
suppliers and customers through written inquiry and evaluation of responses. 
The Company intends to follow up with those suppliers or customers that 
indicate material problems. Alternate suppliers or service providers will be 
identified for those whose responses indicate an unusually high risk of a Y2K 
problem. The Company's evaluation of business processes that are not related 
to information systems, and the development of contingency plans where such 
evaluation identifies a high risk of a Y2K problem should be completed by the 
third quarter of 1999. The main risks associated with the Y2K problem are the 
uncertainties as to whether the Company's suppliers can continue to perform 
their services for the Company uninterrupted by the Y2K event, and whether 
the Company's non-retail customers can continue to operate their business 
uninterrupted by the Y2K event. Although the state of readiness of the 
Company's suppliers and customers will be monitored and evaluated, and 
contingency plans will be developed, no assurances can be given as to the 
eventual state of readiness of the Company's suppliers and/or customers. Nor 
can any assurances be given as to eventual effectiveness of the Company's 
contingency plans.

         While the Company continues to believe that the Y2K matters 
discussed above will not have a materially adverse impact on the Company's 
business, financial condition or results of operations, it is not possible to 
determine with certainty whether or to what extent the Company may be 
affected. The Company has not developed a reasonably likely worst case 
scenario with respect to Y2K problems the company may encounter.

         The preceding discussion contains forward-looking information within 
the meaning of Section 21E of the Exchange Act. This disclosure is also 
subject to protection under the Year 2000 Information and Readiness 
Disclosure Act of 1998, Public Law 105-271, as a "Year 2000 Statement" and 
"Year 2000 Readiness Disclosure" as defined therein. Actual results may 
differ materially from such projected information due to changes in the 
underlying assumptions.

RISK FACTORS AND CAUTIONARY STATEMENTS

         When used in this Form 10-QSB and in future filings by the Company 
with the Securities and Exchange Commission, in the Company's press releases 
and in oral statements made with the approval of an authorized executive 
officer, the words or phrases "will likely result", "are expected to", "will 
continue", "is anticipated", "estimate", "project", or similar expressions 
are intended to identify "forward-looking statements" within the meaning of 
the Private Securities Litigation Reform Act of 1995. Such statements are 
subject to certain risks and uncertainties, including those discussed under 
this caption "Risk Factors and Cautionary Statements," that could cause 
actual results to differ materially from historical earnings and those 
presently anticipated or projected. The Company wishes to caution readers not 
to place undue reliance on any such forward-looking statements, which speak 
only as of the date made, and wishes to advise readers that the factors 
listed below could cause the Company's actual results for future periods to 
differ materially from any opinions or statements expressed with respect to 
future periods in any current statements.

         The Company will NOT undertake and specifically declines any 
obligation to publicly release the result of any revisions which may be made 
to any forward-looking statements to reflect events or circumstances after 
the date of such statements or to reflect the occurrence of anticipated or 
unanticipated events.

         - The Company's revenues and income are derived primarily from the 
development and commercialization of medical and skin care products. The 
medical and skin care products industries is highly competitive. Such 
competition could negatively impact the Company's market share and therefore 
reduce the Company's revenues and income.

                                     - 12 -

<PAGE>

         - Competition may also result in a reduction of average unit prices 
paid for the Company's products. This, in turn, could reduce the percentage 
of profit margin available to the Company for its product sales.

         - The Company's future operating results are dependent on its 
ability to develop, produce and market new and innovative products and 
technologies, and to successfully enter into favorable licensing and 
distribution relationships. There are numerous risks inherent in this complex 
process, including rapid technological change and the requirement that the 
Company develop procedures to bring to market in a timely fashion new 
products and services that meet customers' needs.

         - Historically, the Company's operating results have varied from 
fiscal period to fiscal period; accordingly, the Company's financial results 
in any particular fiscal period are not necessarily indicative of results for 
future periods.

         - The Company may offer a broad variety of products and technologies 
to customers around the world. Changes in the mix of products and 
technologies comprising revenues could cause actual operating results to vary 
from those expected.

         - The Company's success is partly dependent on its ability to 
successfully predict and adjust production capacity to meet demand, which is 
partly dependent upon the ability of external suppliers to deliver components 
and materials at reasonable prices and in a timely matter; capacity or supply 
constraints, as well as purchase commitments, could adversely affect future 
operating results.

         - The Company offers its products and technologies directly and 
through indirect distribution channels. Changes in the financial condition 
of, or the Company's relationship with, distributors, licensees and other 
indirect channel partners, could cause actual operating results to vary from 
those expected.

         - The Company does business and continues to seek to develop 
business on a worldwide basis. Global and/or regional economic factors and 
potential changes in laws and regulations affecting the Company's business, 
including without limitation, currency exchange rate fluctuations, changes in 
monetary policy and tariffs, and federal, state and international laws 
regulating its products, could impact the Company's financial condition or 
future results of operations.

         - The market price of the Company's securities could be subject to 
fluctuations in response to quarter to quarter variations in operating 
results, market conditions in the medical and skin care products industry, as 
well as general economic conditions and other factors external to the Company.

PART II - OTHER INFORMATION


ITEM 3.       DEFAULTS UPON SENIOR SECURITIES.

              The information regarding the default of certain senior securities
              of the Company is stated in Item 2. Management's Discussion and
              Analysis of Financial Condition and Results of
              Operations -- Liquidity and Capital Resources and is incorporated
              herein by reference.

                                     - 13 -

<PAGE>

ITEM 6.       EXHIBITS AND REPORTS ON FORM 8-K.

             (a)  EXHIBITS.

                  Exhibit 27 Financial Date Schedules.


             (b)  REPORTS ON FORM 8-K.

                  None.


                                     - 14 -

<PAGE>

                                   SIGNATURES



          In accordance with 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.

                                HYMEDIX, INC.
                                (Registrant)



Date: May 14, 1999              By: /s/ Charles K. Kliment
                                    -----------------------------------------
                                    Charles K. Kliment
                                    President (Principal Executive Officer)



Date: May 14, 1999              By: /s/ William G. Gridley, Jr.
                                    -----------------------------------------
                                    William G. Gridley, Jr.
                                    Chairman, Chief Financial Officer,
                                    (Secretary, Treasurer, Principal
                                    Financial Officer and Principal 
                                    Accounting Officer), Director




                                     - 15 -