UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] Quarterly Report Pursuant to Section 13 or 15 (d) of the Securities
Exchange Act of 1934 For the Quarterly Period Ended: March 31, 2003
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 Identification)
incorporation or organization)
2201 West Sample Road, Building 9, Suite 7B
Pompano Beach, FL 33073 (954) 861-6400
---------------------------------------- -------------------------------
(Address of Principal Executive Offices) (Registrant's telephone number)
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 April 30, 2003: 7,110,336
TABLE OF CONTENTS PAGE
Part I. Financial Information
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Item 1. Financial Statements (Unaudited)
Balance Sheets-- March 31, 2003 and December 31, 2002 3
Statements of Operations-- Three months ended March 31,
2003 and 2002 4
Statements of Cash Flows-- Three months ended March 31,
2003 and 2002 5
Notes to Financial Statements 6-7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8-14
Item 4. Control and Procedures 15
Part II. Other Information
- --------------------------
Exhibits and Reports on Form 8-K. 16
Signatures 17
Certification of Chief Officers Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002 and Item 307 of Regulation S-K 18-20
Certification Pursuant to 18 U.S.C, Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 21-23
2
HYDRON TECHNOLOGIES, INC.
Condensed Balance Sheets
March 31, 2003 December 31, 2002
(Unaudited) (Note)
------------ ------------
ASSETS
Current Assets
Cash and cash equivalents $ 172,011 $ 291,136
Trade accounts receivable 4,858 40,000
Inventories 725,521 742,529
Prepaid expenses and other current assets 28,131 40,007
------------ ------------
Total current assets 930,521 1,113,672
Property and equipment, less accumulated
depreciation of $554,829 and $552,459 at
2003 and 2002, respectively 12,916 9,448
Deposits 20,816 20,816
Deferred product costs, less accumulated
amortization of $5,364,662 and $5,317,262 at
2003 and 2002, respectively 283,693 324,613
------------ ------------
Total Assets $ 1,247,946 $ 1,468,549
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable $ 79,185 $ 133,983
Deferred revenues 123,042 96,390
Accrued liabilities 365,824 350,570
------------ ------------
Total current liabilities 568,051 580,943
Commitments and contingencies -- --
Shareholders' equity
Preferred stock - $.01 par value
5,000,000 shares authorized; no shares issued
or outstanding -- --
Common stock - $.01 par value
30,000,000 shares authorized; 7,110,336 shares
issued; and 7,050,136 shares outstanding
at 2003 and 2002, respectively 71,103 71,103
Additional paid-in capital 19,890,587 19,890,587
Accumulated deficit (18,842,637) (18,634,926)
Treasury stock, at cost; 60,200 shares (439,158) (439,158)
------------ ------------
Total Shareholders' equity 679,895 887,606
------------ ------------
Total liabilities and shareholders equity $ 1,247,946 $ 1,468,549
============ ============
Note: The balance sheet at December 31, 2002 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 accompanying notes to condensed financial statements
3
HYDRON TECHNOLOGIES, INC.
Condensed Statement of Operations
(Unaudited)
Three months ended March 31,
----------------------------
2003 2002
----------- -----------
Net Sales $ 276,662 $ 380,257
Cost of sales 65,574 85,581
----------- -----------
Gross profits 211,088 294,676
Expenses
Royalty expense -- 19,086
Research and development 17,179 17,877
Selling, general & administration 352,238 377,469
Depreciation & amortization 49,770 75,000
----------- -----------
Total expenses 419,188 489,432
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Operating loss (208,100) (194,756)
Interest income 388 297
----------- -----------
Loss before income taxes (207,712) (194,459)
Income taxes expense -- --
----------- -----------
Net loss $ (207,712) $ (194,459)
=========== ===========
Basic and diluted loss per share
Net loss per common share $ (0.03) $ (0.04)
=========== ===========
Weighted average shares
outstanding (basic and diluted) 7,050,136 4,975,136
See notes to condensed financial statements.
4
HYDRON TECHNOLOGIES, INC.
Condensed Statements of Cash Flow
(Unaudited)
Three Months ended
----------------------------
2003 2002
------------ ------------
Operating Activities
Net Loss $ (207,712) $ (194,459)
Adjustments to reconcile net loss to
net cash provided (used) by operating activities
Depreciation and amortization 49,770 75,000
Change in operating assets and liabilities
Trade accounts receivables 35,142 15,960
Inventories 17,008 49,720
Prepaid expenses and other current assets 11,877 20,073
Deposits -- (187)
Accounts payable (54,798) 62,040
Deferred revenues 26,652 (7,535)
Accrued liabilities 15,254 (16,601)
------------ ------------
Net cash provided (used) by operating activities (106,807) 4,011
Investing activities
Capital Expenditures, net (5,838) --
Deferred product costs (6,480) --
------------ ------------
Net cash provided (used) by investing activities (12,318) --
Financing activities
Net cash provided (used) by financing activities -- --
------------ ------------
Net increase (decrease) in cash and cash equivalents (119,125) 4,011
Cash and cash equivalents at beginning of period 291,136 167,067
------------ ------------
Cash and cash equivalents at end of period $ 172,011 $ 171,078
============ ============
See notes to condensed financial statements.
5
Hydron Technologies, Inc.
Notes to Condensed Financial Statements
(unaudited)
Note A - Basis of Presentation
The accompanying unaudited 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. (the
"Company"), 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, 2003 are not necessarily indicative of the
results that may be expected for the year ending December 31, 2003. For further
information, refer to the financial statements and footnotes included in the
Company's Annual Report on Form 10-K for the year ended December 31, 2002.
Note B - Inventories
Inventories consist of the following:
March 31, December 31,
2003 2002
------------ ------------
Finished Goods $ 184,330 $ 208,748
Raw materials and components 541,191 533,781
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$ 725,521 $ 742,529
============ ============
Note C - Distribution
The majority of the Company's products are currently sold in the United
States through Hydron(TM) direct marketing channels (proprietary Catalog and the
World Wide Web site). The Company also sells its products to private label
customers, television retailers and, to a lesser extent, internationally through
salons and doctors offices.
Note D - Earnings Per Share
Options and warrants to purchase 2,036,100 shares of common stock were
outstanding at March 31, 2003, but were not included in the computation of
diluted earnings per share because the effect would be anti-dilutive.
The Board of Directors has approved the issuance of an additional
378,500 options; subject to the approval of a stock option plan amendment at the
next shareholders' meeting. These options have not been reflected in March 31,
2003 calculations since there are insufficient options available without the
shareholders actions.
6
Hydron Technologies, Inc.
Notes to Condensed Financial Statements
(unaudited)
Note E - Stock Options and Warrants
There were no options granted during the three months ended March 31,
2003 and the pro forma information regarding net income and earnings per share
required by FASB Statement No. 123 is unchanged from that reflected in the
Company's Annual Report on Form 10-K for the year ended December 31, 2002.
Note F - Going Concern
The accompanying condensed financial statements were prepared assuming
that the Company will continue as a going concern. This basis of accounting
contemplates the recovery of the Company's assets and the satisfaction of its
liabilities in the normal course of operations. The Company's ultimate ability
to attain profitable operations is dependent upon obtaining additional financing
or to achieve a level of sales adequate to support its cost structure.
Accordingly, there are no assurances that the Company will be
successful in achieving the above plans, or that such plans, if consummated,
will enable the Company to obtain profitable operations or continue as a going
concern
7
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Application of Critical Accounting Policies and Estimates
- ---------------------------------------------------------
The preparation of financial statements requires us to make estimates
and judgments that affect the reported amounts of assets, liabilities, sales and
expenses, and related disclosure of contingent assets and liabilities. On an
ongoing basis, we evaluate our estimates, including those related to bad debts,
inventories, investments, intangible assets, income taxes, restructuring, and
contingencies and litigation. We base our estimates on historical experience and
on various other assumptions that we believe to be reasonable under the
circumstances, the results of which form the basis for making judgments about
the carrying values of assets and liabilities that are not readily apparent from
other sources. Actual results may differ from these estimates under different
assumptions or conditions.
We believe the following critical accounting policies are significant
in preparation of our financial statements.
Revenue Recognition
Hydron(TM) records product sales when persuasive evidence of an
arrangement exists, shipment has occurred, the price to the buyer is fixed or
determinable and collectibility is reasonably assured. A provision is made at
the time sales are recognized for the estimated cost of product warranties.
Allowance for Doubtful Accounts
A majority of Hydron(TM) products (50% - 90%) are sold on a COD basis.
Product sold on account is limited. Hydron(TM) generally computes an allowance
for doubtful accounts by specifically reserving for customers known to be in
financial difficulty. Therefore, if the financial condition of our customers
were to deteriorate, we may have to increase our allowance for doubtful
accounts. This would reduce our earnings and our cash flows.
Inventory Valuation
Hydron(TM) initially values inventory at actual cost to purchase and/or
manufacture inventory. We periodically review these values to ascertain that the
inventory continues to maintain a market value that is in excess of its recorded
cost. Generally, reductions in value of inventory below cost are caused by our
maintenance of stocks of products in excess of demand. We regularly review
inventory quantities on hand and, where necessary, record provisions for excess
and obsolete inventory based on either our estimated forecast of products demand
and production requirement or historical trailing usage of the product. If our
sales do not materialize as planned or at historic levels, we may have to
increase our reserve for excess and obsolete inventory. This would reduce our
earnings and cash flows.
Long-Lived Assets
Hydron(TM) reviews long-lived assets and certain identifiable
intangibles held and used for possible impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. In evaluating the fair value and future benefits of its intangible
8
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations (continued)
Application of Critical Accounting Policies and Estimates (continued)
- ---------------------------------------------------------
assets, management performs an analysis of the anticipated undiscounted future
net cash flows of the individual assets over the remaining amortization period.
Hydron(TM) recognizes an impairment loss if the carrying value of the asset
exceeds the expected future cash flows. As of March 31, 2003 there was no deemed
impairment of long-lived assets.
Property and Equipment
Property and equipment, consisting primarily of furniture and equipment, is
carried at cost. Depreciation is computed using the straight-line method over
the estimated useful lives of the assets, ranging from four to six years.
Stock-based Compensation
The disclosure provision of Statement No. 148 have been adopted by the
Company with appropriate disclosure identified above.
Business
- --------
Hydron Technologies, Inc. markets a broad range of consumer and oral
health care products using a moisture-attracting ingredient (the "Hydron(R)
polymer"), and owns a non-prescription drug delivery system for topically
applied pharmaceuticals, which uses such polymer. The Company holds U.S. and
international patents on, what Management believes is, the only known
cosmetically acceptable method to suspend the Hydron polymer in a stable
emulsion for use in personal care/cosmetic products. The Company is developing
other personal care/cosmetic products for consumers using its patented
technology and would, when appropriate, either seek licensing arrangements with
third parties, or develop and market proprietary products through its own
efforts. Management believes that because of their unique properties, products
9
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations (continued)
Business (continued)
- --------
that utilize the Hydron polymer have the potential for wide acceptance in
consumer and professional health care markets.
The Company has been engaged in the development of various consumer
products using Hydron(TM) polymers since 1986. The Company's products are
designed to address concerns about aging, and include Hydron(TM) skincare, hair
care, bath and body and sun care. The Company currently has thirty-nine
individual products available in the following product lines: skin care (22
products), hair care (7 products), bath and body (8 products) and sun care (2
products). These products are also packaged into collections and sold at a more
favorable value than the individual products sold separately. All of the
products are available through the Hydron(TM) Catalog and Web site
www.hydron.com ("Catalog").
Management believes that the Company's product lines are unique and
offer the following competitive benefits: the moisturizers self-adjust to match
the skin's optimal pH balance soon after they are applied to the skin; they
become water-insoluble on the skin's surface, and unlike all other water-based
cremes and lotions, are not removed by the skin's perspiration or plain water;
they are oxygen-permeable, allowing the skin to breathe; they do not emulsify
the skin's natural moisturizing agents, as do conventional cremes and lotions;
and they attract and hold water, creating a cushion of moisture on the skin's
surface that promotes penetration of other beneficial product ingredients, all
while leaving no greasy after-feel.
The Company's products are dermatologist tested and approved for all
skin types. Products for use around the eye area are also ophthalmologist tested
and safe for contact lens wearers. Most of the Company's moisturizing products
are based on the Company's patented emulsion system, which permits the product
ingredients to deliver their intended benefits over an extended period of time
and in a more efficient manner.
Management believes that the Hydron(TM) emulsion system can enhance the
effectiveness of topical over-the-counter medications. The emulsion system is
designed to deposit a polymer film on the skin's surface which has a number of
advantages over traditional lotions: promotes hydration of the outer layer of
skin, improves penetration into the skin's pores, and has good tactility and
flexibility. The Company expects to continue to focus research and development
resources on proprietary technology-based products as determined by Management's
assessment of consumer demand.
The Company discovered that the Hydron(TM) emulsion system also adjusts
pH on the skin to match the pH of the stratum corneum, the skin's surface layer.
It is evident in recent skin research (Kligman 2002) that the pH range of the
emulsion system is ideal for contributing to the skin's natural healing process
and enzyme production responsible for rebuilding the skin's lipid barrier. A
patent application was filed February 14, 2002 to cover this technology, which
also applies to a new acne treatment system.
Since August 2000, the Company has been researching and developing a
new technology that provides a method for the delivery of oxygen into the skin
and tissue at depths considered medically therapeutic without the use of the
bloodstream. The Company filed for patent protection as of February 2001. The
10
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations (continued)
Business (continued)
- --------
patent application is pending. Management anticipates that as a result of its
continuing research into tissue oxygenation, the Company's primary focus will
begin to shift from personal care/cosmetic products to developing/licensing
applications or products based upon this new technology.
This technology has far reaching implications in that oxygen can now be
delivered into skin that does not receive sufficient oxygen from the
bloodstream. Management believes that this approach to tissue oxygenation
developed by Hydron(TM) is unique. It utilizes an existing technology that
infuses liquid with oxygen at 20+ times normal levels to create a
super-oxygenated liquid filled with micro-bubbles of highly pressurized oxygen.
When placed in contact with the skin, the highly saturated fluid and
micro-bubbles are transferred directly to the skin through osmosis and kinetic
diffusion.
Research and development efforts to date have included clinical
testing, in-vitro bacteriological testing, micro-bubble size analysis, packaging
prototypes, and stability testing. Clinical testing on healthy subjects was
conducted at the University of Massachusetts Medical School; Department of
Thoracic Surgery producing an average increase in subcutaneous tissue
oxygenation of 54% in healthy individuals. Management believes that these tests
provided the first-ever evidence that subcutaneous tissue could be oxygenated
from the outside in.
The skin treatment is expected to have numerous applications in wound
healing and anti-aging skincare treatments. Current medical research shows that
each year, in the United States alone, medical problems associated with oxygen
deprivation to the skin and tissues can affect over 16 million diabetics, two
million burn patients, 600,000 individuals with impaired circulatory systems and
countless other applications, from individuals suffering with chronic wounds to
extending the life of organs for transplant during transportation. Likewise,
medical problems associated with anaerobic bacteria (i.e. organisms that thrive
in the absence of oxygen) such as acne, diaper rash, post-operative infections
and periodontal disease may be reduced or eliminated by application of this
technology.
Oxygen is also is an essential factor in aging as the facial skin loses
about 40% of oxygen carrying capacity by age 65 (a factor in diminished collagen
formulation and wrinkling). As a result, anti-aging/wrinkling applications of
this technology may ultimately lead to a new line of skincare applications and
products.
In July 2002, the Company reached an agreement for licensing existing
machine technology from Life International Products, Inc. that included issuance
of 325,000 shares of new Hydron(TM) stock and future royalty payments. This will
allow Hydron(TM) to be able to manufacture future products under Hydron(TM)'s
tissue oxygenation pending patent. The company plans additional efficacy testing
to further evaluate the technology and future potential products. It is
anticipated that efficacy testing will require an additional 12 to 24 months.
Initial testing will be focused on cell viability and gene expression within
oxygen-deprived tissues subsequently exposed to super-oxygenated saline
solutions.
On December 10, 2002, Hydron(TM) completed a non-brokered private
placement of 1,750,000 Units at $.20 per Unit ($350,000), to several accredited
investors including its chairman, Richard Banakus and a director, Ronald J.
Saul. Each Unit is comprised of one share of common stock and one three-year
11
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations (continued)
Business (continued)
- --------
option to buy one additional common share at $.20. The proceeds will be added to
the Company's working capital and enable Hydron(TM) Technologies to maintain its
catalog business, while supporting basic development of Hydron(TM)'s patent
pending skin and tissue oxygenation technology and associated intellectual
property.
The Company has also developed and currently markets a group of
Hydron(TM) polymer-based products for dental professionals under the
Hydrocryl(TM) brand name. These include a heat cured material used in the
manufacture of dentures, as well as cold cure kits used in connection with the
relining or repairing of existing Hydrocryl(TM) or conventional acrylic dentures
that is necessitated by the continual changes that occur in the tissue structure
of the mouth. Management believes that the hydrophilic, or moisture attracting
properties, of these Hydron(TM) polymer-based products give them competitive
advantages over conventional acrylic dentures and denture repair kits, which are
not hydrophilic. Sales of Hydrocryl(TM) brand name products were minimal in
2002, 2001 and 2000.
Results of Operations
- ---------------------
Net sales for the three months ended March 31, 2003 were $276,662; a
decrease of $103,595, or 27%, from net sales of $380,257 for the three months
ended March 31, 2002. Catalog sales decreased by approximately $61,197, or
18.3%, from $333,600 for the three months ended March 31, 2002 to $272,403 for
the three months ended March 31, 2003. The decrease in direct marketing catalog
sales resulted primarily from fewer promotional offers to existing customers,
continued softness of the economy and consumers preoccupation with the war in
the Middle East.
Non-catalog net sales, including television retail, contract sales and
international, for the three months ended March 31, 2003 were $4,258; a decrease
of $42,398, or 91%, from non-catalog net sales of $46,656 for the three months
ended March 31, 2002. The quarterly non-catalog sales decrease reflects a shift
in the timing of sales to private label customers to the second quarter.
The Company's overall gross profit margin for the three months ended
March 31, 2003 was 76%, as compared to 78% for the three months ended March 31,
2002. The decrease in gross profit margins for the first quarter reflects a
shift in product mix.
Royalty expenses for the three months ended March 31, 2003 were $0
compared to $19,086 for the three months ended March 31, 2002. The elimination
of royalty expenses is the result of an agreement in principle to eliminate the
respective royalty obligations of the parties under the GPS Agreement between
the Company and Hydro-Med as assignee of GPS.
R&D expenses for the three months ended March 31, 2003 were $17,179; a
decrease of $698, or 4%, from R&D expenses of $17,877 for the three months ended
March 31, 2002. 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.
12
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations (continued)
Results of Operations (continued)
- ---------------------
Selling, general and administrative ("SG&A") expenses for the three
months ended March 31, 2003 were $352,238; a decrease of $25,231, or 7%, from
SG&A expenses of $377,469 for the three months ended March 31, 2002. The
decrease was principally due to decreased sales commissions and professional
expenses.
Interest and investment income for the three months ended March 31,
2003 was $388, an increase of $91, or 31%, from interest and investment income
of $297 for the three months ended March 31, 2002.
The net loss for the three months ended March 31, 2003 was $207,712, an
increase of $13,253, or 7%, as compared to a net loss of $194,459 for the three
months ended March 31, 2002. The decrease in the net loss resulted primarily
from the factors discussed above.
Liquidity and Financial Resources
- ---------------------------------
The Company's working capital was approximately $362,469 at March 31,
2003, including cash and cash equivalents of approximately $172,011. Cash used
by operating activities was $106,807 and $12,318 was invested in equipment and
patents.
The Company has incurred significant losses over the past five years.
The ability of the Company to continue as a going concern is dependent upon
increasing sales while managing operating expenses.
Management's plan to increase sales and reduce operating expenses
includes the following elements:
o Licensing proprietary and possibly patentable technologies, including
skin and tissue oxygenation and the acne ingredient delivery system,
where appropriate to third party companies.
o Continued emphasis on Catalog sales, including sales made over the
internet, since these sales have higher profit margins and represent
markets for the Company that are growing more rapidly than the
Company's traditional television market.
o Increased use of direct marketing techniques to reach new and current
consumers such as print promotions mailed to targeted consumers, Web
site specials, promotions to other Web site customers, and direct
E-mail promotions to new customers.
o Addition of new revenue streams through expanded international
distribution achieved through the use of distribution agreements with
foreign and international distributors.
o Development, acquisition and marketing of new product lines based on
proprietary technologies that appeal to the aging baby boomers as well
as the new generation.
13
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations (continued)
Liquidity and Financial Resources (continued)
- ---------------------------------
o In addition, the Company has plans to build upon its success in
private label sales utilizing Hydron(TM) polymer based formulas. The
Company is also pursuing international distribution agreements that
will expand the Company's distribution around the world.
o Regarding new products and markets, the Company will continue to
develop proprietary technology that it believes will improve its
long-term success in the skin care business, such as the acne
ingredient delivery system. The Company's Super Oxygenated fluid and
composition technology should allow significant advances in skin care
products and open application and licensing opportunities beyond the
skin care category.
o The Company does not have the financial resources to sustain a
national advertising campaign to support distribution of its products
in conventional retail stores. In view of the foregoing, Management's
strategy has been to enter into marketing, licensing and distribution
agreements with third parties which have greater financial resources
than those of the Company and that can enhance the Company's product
introductions with appropriate national marketing support programs.
There can be no assurances that Management's Plan will be successful
and the Company's actual results could differ materially. No estimate has been
made should Management's plan be unsuccessful.
Cautionary Statement Regarding Forward Looking Statements
- ---------------------------------------------------------
Certain statements contained in this Report on Form 10-Q 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 the Company's expectations, hopes, intentions, beliefs or
strategies regarding the future. Forward looking statements include the
Company'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 the
Company on the date of this Report, and the Company assumes no obligation to
update any such forward looking statement. It is important to note the Company's
actual results could differ materially from those expressed or implied in such
forward looking statements. You should also consult the Company's Annual Report
on Form 10-K for the year ended December 31, 2002 as well as those factors
listed from time to time in the Company's other reports filed with the
Securities and Exchange Commission pursuant to the Securities Exchange Act of
1934 and the Securities Act of 1933.
14
Item 4. Controls and Procedures
Within the 90-day period prior to the date of this report, Hydron
Technologies, Inc. carried out an evaluation, under the supervision and with the
participation of management, including its Chief Operating Officer and Chief
Financial Officer, of the effectiveness of the design and operation of Hydron
Technologies, Inc.'s disclosure controls and procedures pursuant to Exchange Act
Rule 13a-14. Based upon that evaluation, the Chief Operating Officer and Chief
Financial Officer concluded that Hydron Technologies, Inc.'s disclosure controls
and procedures are effective to timely alert them to material information
required to be included in Hydron Technologies, Inc.'s Exchange Act filing.
There have been no significant changes in Hydron Technologies, Inc.'s
internal controls or in other factors that could significantly affect internal
controls subsequent to the date that Hydron Technologies, Inc. carried out its
evaluation.
15
Part II - Other Information
Item 6. Exhibits and Reports on Form 8-K
Current Reports on Form 8-K
-Current Report on Form 8-K, dated January 2, 2003 reporting Item 5.
Other Events; Non-brokered private placement.
16
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/ WILLIAM A. FAGOT
-------------------------------
William A. Fagot
Chief Financial Officer
Dated: May 12, 2003
17
Certification of Chief Executive Officer
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 and
Item 307 of Regulation S-K
I, Richard Banakus, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Hydron
Technologies, Inc.;
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
we have:
a. Designed such disclosure controls and procedures to ensure
that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us
by others within those entities, particularly during the
period in which this quarterly report is being prepare;
b. Evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to
the filing date of this quarterly report (April, 2003); and
c. Presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based
on our evaluation as of the Evaluation Date.
5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the
audit committee of registrant's board of directors:
a. All significant deficiencies in the design or operation of
internal controls which could adversely affect the
registrant's ability to record, process, summarize and report
financial data and have identified for the registrant's
auditors any material weaknesses in internal controls;
b. Any fraud, whether or not material, that involves management
or other employees who have a significant role in the
registrant's internal controls.
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant
deficiencies and material weaknesses.
/s/ RICHARD BANAKUS
- ------------------------------
Richard Banakus
Chief Executive Officer
May 1, 2003
17
Certification of Chief Operating Officer
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 and
Item 307 of Regulation S-K
I, Terrence S. McGrath, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Hydron
Technologies, Inc.;
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
we have:
a. Designed such disclosure controls and procedures to ensure
that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us
by others within those entities, particularly during the
period in which this quarterly report is being prepare;
b. Evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to
the filing date of this quarterly report (April, 2003); and
c. Presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based
on our evaluation as of the Evaluation Date.
5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the
audit committee of registrant's board of directors:
a. All significant deficiencies in the design or operation of
internal controls which could adversely affect the
registrant's ability to record, process, summarize and report
financial data and have identified for the registrant's
auditors any material weaknesses in internal controls;
b. Any fraud, whether or not material, that involves management
or other employees who have a significant role in the
registrant's internal controls.
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant
deficiencies and material weaknesses.
/s/ TERRENCE S. MCGRATH
- ------------------------------
Terrence S. McGrath
Chief Operating Officer
May 9, 2003
18
Certification of Chief Financial Officer
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 and
Item 307 of Regulation S-K
I, William A. Fagot, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Hydron
Technologies, Inc.;
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
we have:
a. Designed such disclosure controls and procedures to ensure
that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us
by others within those entities, particularly during the
period in which this quarterly report is being prepare;
b. Evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to
the filing date of this quarterly report (April, 2003); and
c. Presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based
on our evaluation as of the Evaluation Date.
5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the
audit committee of registrant's board of directors:
a. All significant deficiencies in the design or operation of
internal controls which could adversely affect the
registrant's ability to record, process, summarize and report
financial data and have identified for the registrant's
auditors any material weaknesses in internal controls;
b. Any fraud, whether or not material, that involves management
or other employees who have a significant role in the
registrant's internal controls.
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant
deficiencies and material weaknesses.
/s/ WILLIAM A. FAGOT
- ---------------------------
William A. Fagot
Chief Financial Officer
May 9, 2003
19