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Hudson Technologies Inc/NY – ‘10QSB’ for 6/30/99

On:  Friday, 8/13/99   ·   For:  6/30/99   ·   Accession #:  891554-99-1626   ·   File #:  33-80270-NY

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  As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

 8/13/99  Hudson Technologies Inc/NY        10QSB       6/30/99    5:153K                                   Document Techs Inc/FA

Quarterly Report — Small Business   —   Form 10-QSB
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10QSB       Quarterly Report -- Small Business                    20    110K 
 2: EX-3.1      Certificate of Incorporation                           3     15K 
 3: EX-3.2      Certificate of Amendment                               4     16K 
 4: EX-3.3      Certificate of Incorporation                          25     96K 
 5: EX-27       Financial Data Schedule                                1      8K

10QSB   —   Quarterly Report — Small Business
Document Table of Contents

Page (sequential) | (alphabetic) Top
 
11st Page   -   Filing Submission
17Item 1
"Item 1. Legal Proceedings
19Item 2
"Item 6. Exhibits and Reports on Form 8-K 
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================================================================================

 U.S. Securities and Exchange Commission
Washington, D.C. 20549

 Form 10-QSB

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

For the quarterly period ended June 30, 1999

OR

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

 For the transition period from ____________ to ____________

Commission file number 1-13412

 ---------------------
 Hudson Technologies, Inc.

 ---------------------
 (Exact name of small business issuer as specified in its charter)

New York                                           13-3641539 
(State or other jurisdiction of                          (I.R.S. Employer       
Incorporation or organization)                        Identification number)  

275 North Middletown Road                                                       
Pearl River, New York                                          10965            
(Address of principal executive offices)                     (ZIP Code)         

 Issuer's telephone number, including area code:
(914) 735-6000

 ---------------------

 Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the past     
twelve 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 issuer's classes of common
equity, as of the latest practicable date:                                      

Common stock, $0.01 par value                     5,085,820 shares        
-----------------------------                     ----------------        
        Class                              Outstanding at July 31,1999

================================================================================


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 Hudson Technologies, Inc.
 Index

Part I.  Financial Information                                      Page Number 
-------  ---------------------                                      ----------- 

   Item 1.- Consolidated Balance Sheets                            3
            Consolidated Statements of Operations                  4
            Consolidated Statements of Cash flows                  5
            Notes to the Consolidated Financial Statements         6

Item 2.- Management's Discussion and Analysis of Financial    
            Condition and Results of Operations                   10

Part II. Other information                                                      
-------- -----------------                                                      

   Item 1.- Legal Proceedings                                     17
   Item 2.- Changes in Securities and Use of Proceeds             19
   Item 6.- Exhibits and Reports on Form 8-K                      19

Signatures                                                              20      

                                                                               2


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Part 1 - Financial Information

Hudson Technologies, Inc. and subsidiaries
 Consolidated Balance Sheets
(Amounts in thousands, except for share amounts)

                                                        [Enlarge/Download Table]

                                                                   June 30,   December 31,
                                                                    1999         1998     
                                                                    ----         ----     
                                                                                          
Assets                                                           (unaudited)              
Current assets:                                                                           
     Cash and cash equivalents                                    $  2,489    $    776    
     Trade accounts receivable - net of allowance for doubtful                            
         accounts of $236 and $240                                   2,026       1,075    
     Inventories                                                     4,693       3,284    
     Prepaid expenses and other current assets                         285         208    
                                                                  --------    --------    
          Total current assets                                       9,493       5,343    

Property, plant and equipment, less accumulated depreciation         5,879       5,332    
Other assets                                                           124         184    
                                                                  --------    --------    
          Total Assets                                            $ 15,496    $ 10,859    
                                                                  ========    ========    
Liabilities and Stockholders' Equity                                                      
Current liabilities:                                                                      
    Accounts payable and accrued expenses                         $  3,840    $  4,250    
    Short-term debt                                                  2,095       1,040    
                                                                  --------    --------    
           Total current liabilities                                 5,935       5,290    
Deferred income                                                         30          42    
Long-term debt, less current maturities                              1,732       1,885    
                                                                  --------    --------    
           Total Liabilities                                         7,697       7,217    
                                                                  --------    --------    
Commitments and contingencies                                                             

Stockholders' equity:                                                                     
    Common stock, $0.01 par value; shares authorized                                      
      20,000,000; issued outstanding 5,085,820                          51          51    
    Preferred stock shares authorized 5,000,000:                                          
       Series A convertible preferred stock, $.01 par value                               
          ($100 liquidation preference value) shares authorized                           
           75,000; issued and outstanding 65,000 and none            6,500        --      
    Additional paid-in capital                                      21,845      22,545    
    Accumulated deficit                                            (20,597)    (18,954)   
                                                                  --------    --------    
           Total Stockholders' Equity                                7,799       3,642    
                                                                  --------    --------    
 Total Liabilities and Stockholders' Equity                       $ 15,496    $ 10,859    
                                                                  ========    ========    

See accompanying Notes to the Consolidated Financial Statements.                

                                                                               3


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Hudson Technologies, Inc. and subsidiaries
 Consolidated Statements of Operations
(Amounts in thousands, except for share and per share amounts)
 (unaudited)

                                                        [Enlarge/Download Table]

                                                   Three month period             Six month period     
                                                       ended June 30,               ended June 30,     
                                                   1999           1998          1999           1998    
                                               -----------    -----------   -----------    ----------- 
                                                                                                       
Revenues                                       $     3,995    $     8,820   $     9,027    $    15,525 
Cost of sales                                        3,002          6,723         6,840         11,407 
                                               -----------    -----------   -----------    ----------- 
      Gross Profit                                     993          2,097         2,187          4,118 
                                               -----------    -----------   -----------    ----------- 
Operating expenses:                                                                                    
     Selling and marketing                             469            384           852            776 
     General and administrative                        882          1,194         2,135          2,436 
     Depreciation and amortization                     328            274           664            547 
                                               -----------    -----------   -----------    ----------- 
          Total operating expenses                   1,679          1,852         3,651          3,759 
                                               -----------    -----------   -----------    ----------- 
Operating income (loss)                               (686)           245        (1,464)           359 
                                               -----------    -----------   -----------    ----------- 
Other income (expense):                                                                                
     Interest expense                                 (106)          (114)         (208)          (198)
     Loss on sale of equipment                         (80)          --             (80)          --   
     Other income                                       85             27           109             52 
                                               -----------    -----------   -----------    ----------- 
        Total other income (expense)                  (101)           (87)         (179)          (146)
                                               -----------    -----------   -----------    ----------- 
Income (loss) before income taxes                     (787)           158        (1,643)           213 
Income taxes                                          --             --            --             --   
                                               -----------    -----------   -----------    ----------- 
Net income (loss)                              $      (787)   $       158   $    (1,643)   $       213 
                                               ===========    ===========   ===========    =========== 
                                                                                           ----------- 
Net income (loss) per common share - basic     $     (0.18)   $      0.03   $     (0.35)   $      0.04 
                                               ===========    ===========   ===========    =========== 
Weighted average number of shares outstanding    5,085,820      5,065,820     5,085,820      5,065,820 
                                               ===========    ===========   ===========    =========== 
Net income (loss) per common share - dilutive  $     (0.18)   $      0.03   $     (0.35)   $      0.04 
                                               ===========    ===========   ===========    =========== 
Weighted average number of shares outstanding    5,085,820      5,079,781     5,085,820      5,076,313 
                                               ===========    ===========   ===========    =========== 

See accompanying Notes to the Consolidated Financial Statements                 

                                                                               4


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Hudson Technologies, Inc. and subsidiaries
 Consolidated Statements of Cash Flows
Increase (Decrease) in Cash and Cash Equivalents
 (unaudited)
(Amounts in thousands)

                                                                [Download Table]

                                                                 Six month period  
                                                                  ended June 30,   
                                                                1999         1998  
                                                                ----         ----  
                                                                                   
Cash flows from operating activities:                                              
Net income (loss)                                            $(1,643)      $   213 
Adjustments to reconcile net income (loss)                                         
   to cash provided (used) by operating activities:                                
     Depreciation and amortization                               664           547 
     Allowance for doubtful accounts                              41            53 
     Changes in assets and liabilities:                                            
          Trade receivables                                     (992)       (2,224)
          Inventories                                         (1,409)        2,348 
          Prepaid and other current assets                       (76)         (126)
          Other assets                                            58           (28)
          Accounts payable and accrued expenses                 (410)            5 
          Deferred income                                        (12)           (9)
                                                             -------       ------- 
          Cash provided (used) by operating activities        (3,779)          779 
                                                             -------       ------- 

Cash flows from investing activities:                                              
Additions to property, plant, and equipment                   (1,209)         (312)
                                                             -------       ------- 
          Cash used by investing activities                   (1,209)         (312)
                                                             -------       ------- 

Cash flows from financing activities:                                              
Proceeds from issuance of Preferred Stock - net                5,800          --   
Proceeds (repayments) from short-term bank borrowings - net      784        (1,140)
Proceeds from long-term debt                                     437           950 
Repayment of long-term debt                                     (320)         (119)
                                                             -------       ------- 
          Cash provided (used) by financing activities         6,701          (309)
                                                             -------       ------- 

     Increase in cash and cash equivalents                     1,713           158 
     Cash and equivalents at beginning of period                 776           626 
                                                             -------       ------- 
          Cash and equivalents at end of period              $ 2,489       $   784 
                                                             =======       ======= 
Supplemental disclosure of cash flow information:                                  
     Cash paid during period for interest                    $   208       $   198 

See accompanying Notes to the Consolidated Financial Statement

                                                                               5


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Hudson Technologies, Inc. and subsidiaries
Notes to Consolidated Financial Statements

General                                                                         

Hudson Technologies, Inc., incorporated under the laws of New York on January   
11, 1991, together with its subsidiaries (collectively, "Hudson" or the         
"Company"), primarily sells refrigerants and provides RefrigerantSide(TM)       
Services performed at a customer's site, consisting of system decontamination to
remove moisture, oils and other contaminants and recovery and reclamation of the
refrigerants used in commercial air conditioning and refrigeration systems. The 
Company operates through its wholly owned subsidiary Hudson Technologies        
Company.                                                                        

Note 1 - Summary of Significant Accounting Policies                             

The accompanying unaudited financial statements have been prepared in accordance
with generally accepted accounting  principles for interim financial  statements
and with the  instructions of Regulation S-B.  Accordingly,  they do not include
all the  information  and footnotes  required by generally  accepted  accounting
principles for complete financial statements. The financial information included
in the quarterly report should be read in conjunction with the Company's audited
financial  statements and related notes thereto for the year ending December 31,
1998.  Operating  results  for  the six  months  ended  June  30,  1999  are not
necessarily  indicative  of the results that may be expected for the fiscal year
ending December 31, 1999.                                                       

In the opinion of management, all estimates and adjustments considered necessary
for a fair  presentation have been included and all such adjustments were normal
and recurring.                                                                  

Consolidation                                                                   

The consolidated  financial  statements  represent all companies of which Hudson
directly or indirectly has majority ownership or otherwise controls. Significant
intercompany  accounts and  transactions  have been  eliminated.  The  Company's
consolidated   financial   statements   include  the  accounts  of  wholly-owned
subsidiaries Hudson Holdings,  Inc. and Hudson Technologies  Company.  Effective
March 19, 1999 the Company sold 75% of its ownership  interest in  Environmental
Support  Solutions,  Inc.  ("ESS")  and as of that date no longer  includes  the
results of that operation in the  consolidated  results of the Company (See Note
3).                                                                             

Fair value of financial instruments                                             

The  carrying   values  of  financial   instruments   including  trade  accounts
receivable,  and accounts  payable  approximate  fair value at June 30, 1999 and
December  31,  1998,   because  of  the  relatively   short  maturity  of  these
instruments.  The carrying value of short-and  long-term debt  approximates fair
value,  based upon quoted  market rates of similar  debt issues,  as of June 30,
1999 and December 31, 1998.                                                     

Credit risk                                                                     

Financial  instruments,  which potentially subject the Company to concentrations
of credit risk,  consist  principally  of temporary cash  investments  and trade
accounts  receivable.  The Company  maintains its temporary cash  investments in
highly-rated  financial  institutions.  The Company's trade accounts receivables
are due from companies  throughout the U.S. The Company  reviews each customer's
credit history before extending credit.                                         

The Company  establishes  an allowance  for doubtful  accounts  based on factors
associated with the credit risk of specific  accounts,  historical  trends,  and
other information.                                                              

During the six months ended June 30, 1999,  two customers  accounted for 19% and
10%, respectively,  of the Company's revenues.  During the six months ended June
30,  1998,  two  customers  accounted  for 36%  and  15%,  respectively,  of the
Company's  revenues.  The  loss of a  principal  customer  or a  decline  in the
economic  prospects and  purchases of the Company's  products or services by any
such customer would have a material  adverse  effect on the Company's  financial
position  and  results  of  operations.                                         

                                                                               6


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Cash and cash equivalents                                                       

Temporary  investments  with  original  maturities  of  ninety  days or less are
included in cash and cash equivalents.                                          

Inventories                                                                     

Inventories,  consisting  primarily of reclaimed  refrigerant products available
for sale,  are stated at the lower of cost, on a first-in  first-out  basis,  or
market.                                                                         

Property, plant, and equipment                                                  

Property,  plant,  and  equipment  are  stated  at  cost;  including  internally
manufactured  equipment.  Provision for  depreciation is recorded (for financial
reporting purposes) using the straight-line  method over the useful lives of the
respective assets. Leasehold improvements are amortized on a straight-line basis
over the shorter of economic life or terms of the respective leases.            

Due to the specialized nature of the Company's business, it is possible that the
Company's estimates of equipment useful life periods may change in the future.  

Revenues and cost of sales                                                      

Revenues are recorded upon completion of service or product  shipment or passage
of title to customers in accordance  with  contractual  terms.  Cost of sales is
recorded based on the cost of products shipped or services performed and related
direct operating costs of the Company's facilities.                             

Income taxes                                                                    

Hudson  utilizes the assets and liability  method for recording  deferred income
taxes,  which provides for the  establishment of deferred tax asset or liability
accounts based on the difference  between tax and financial  reporting  bases of
certain assets and liabilities.                                                 

The Company  recognized a reserve allowance against the deferred tax benefit for
the  current  and prior  period  losses.  The tax  benefit  associated  with the
Company's net operating  loss carry  forwards  would be recognized to the extent
that the Company recognizes net income in future periods.                       

Income (Loss) per common and equivalent shares                                  

Income  (Loss) per common share  (Basic) is  calculated  based on the Net Income
(Loss) for the period less accrued dividends on the outstanding preferred stock,
$113,000 as of June 30, 1999,  divided by the weighted  average number of shares
outstanding.  If dilutive,  common  equivalent  shares (common  shares  assuming
exercise of options and warrants or conversion of preferred stock) utilizing the
treasury stock method are considered in the  presentation  of dilutive  earnings
per share.                                                                      

Estimates and Risks                                                             

The preparation of financial  statements in conformity  with generally  accepted
accounting principles requires management to make estimates and assumptions that
affect  reported  amounts of certain assets and  liabilities,  the disclosure of
contingent  assets and  liabilities,  and the results of  operations  during the
reporting period. Actual results could differ from these estimates.             

The Company  participates  in an industry that is highly  regulated,  changes in
which could affect operating results. Currently the Company purchases virgin and
reclaimable  refrigerants  from  domestic  suppliers and its  customers.  To the
extent  that the  Company  is  unable  to obtain  refrigerants  on  commercially
reasonable  terms or  experiences  a decline  in demand  for  refrigerants,  the
Company could realize reductions in refrigerant  processing and possible loss of
revenues which would have a material adverse affect on operating results.       

Impairment of long-lived assets and long-lived assets to be disposed of         

The Company reviews for impairment  long-lived assets whenever events or changes
in  circumstances  indicate  that the  carrying  amount  of an asset  may not be
recoverable.  Recoverability  of  assets  to be held and used is  measured  by a
comparison  of the  carrying  amount of the  assets to the future net cash flows
expected  to be  generated  by the asset.  If such assets are  considered  to be
impaired, the impairment to be recognized is                                    

                                                                               7


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measured by the amount by which the  carrying  amount of the assets  exceeds the
fair value of the assets.  Assets to be disposed of are reported at the lower of
the carrying amount or fair value less the cost to sell.                        

Recent accounting pronouncements                                                

In June 1998,  the  Financial  Accounting  Standards  Board issued  Statement of
Financial  Accounting  Standards  No.  133,  ("SFAS No.  133")  "Accounting  for
Derivative  Instruments  and Hedging  Activities,"  which  requires  entities to
recognize all  derivatives  as either assets or  liabilities in the statement of
financial  position and measure those instruments at fair value. SFAS No. 133 is
effective for all fiscal years beginning after June 15, 1999.                   

The Company  adopted  SFAS No. 133 as of January 1, 1999.  The  adoption did not
have a  material  effect on the  Company's  financial  position  or  results  of
operations.                                                                     

Note 2 -Stockholders Equity                                                     

On March 16, 1999, the  shareholders of the Company approved an amendment to the
Certificate of Incorporation to authorize the issuance of up to 5,000,000 shares
of Preferred Stock. This  authorization  allows the Board of Directors to, among
other things,  set the number of shares, the dividend rate and the voting rights
on any issuance of Preferred Stock without further shareholder approval.        

On March 30, 1999, the Company completed the sale of 65,000 shares of its Series
A Preferred  Stock,  with a liquidation  value of $100 per share,  to Fleming US
Discovery  Fund III,  L.P. and Fleming US Discovery  Offshore Fund III, L.P. The
gross  proceeds  from the  sale of the  Preferred  Stock  were  $6,500,000.  The
Preferred  Stock has voting  rights on an as if converted  basis.  The number of
votes  applicable  to the  Series A  Preferred  Stock is equal to the  number of
shares  of  common  stock  into  which  the  Series  A  Preferred  Stock is then
convertible.  However,  the holders of the Preferred  Stock will provide the CEO
and  Secretary  of the  Company a proxy to vote all shares  currently  owned and
subsequently  acquired  above  29% of  the  votes  entitled  to be  cast  by all
shareholders of the Company.  The Preferred Stock carries a dividend rate of 7%,
which will increase to 16% on the fifth anniversary date, and converts to Common
Stock at a rate of $2.375  per  share,  which was 27% above the  closing  market
price of Common Stock as of March 29, 1999. The  conversion  rate may be subject
to certain antidilution provisions. The Company engaged an advisor to facilitate
the Company's  efforts in connection with this  transaction.  In addition to the
advisor  fees of  $560,000,  the  Company  issued to the  advisor,  warrants  to
purchase  136,842 shares of the Company's  Common Stock at an exercise price per
share of $2.73.  The  Company is using the net  proceeds  from the  issuance  of
Preferred  Stock to expand  its  RefrigerantSide(TM)  Services  and for  working
capital purposes.                                                               

The  Company  will pay  dividends,  in arrears,  on the  Preferred  Stock,  semi
annually,  either in cash or additional shares, at the Company's option,  during
the first two years after which  dividends will be paid in cash. The Company may
redeem the Preferred  Stock on March 31, 2004 either in cash or shares of Common
Stock valued at 90% of the average  trading price of the Common Stock for the 30
days  preceding  March 31, 2004. In addition,  after March 30, 2001, the Company
may call the Preferred Stock if the market price of the Common Stock is equal to
or greater  than 250% of the  conversion  price and the Common  Stock has traded
with an average  daily volume in excess of 20,000  shares for a period of thirty
consecutive days.                                                               

The Company has provided certain  registration,  preemptive and tag along rights
to the  holders of the  Preferred  Stock.  The holders of the  Preferred  Stock,
voting as a  separate  class,  have the right to elect up to two  members to the
Company's  Board  of  Directors  or at  their  option,  to  designate  up to two
observers to the Company's  Board of Directors who will have the right to attend
and observe  meetings of the Board of  Directors.  Currently,  the holders  will
elect two members to the Board of Directors.                                    

The Company  incurred an aggregate of $700,000 in costs associated with the sale
of the Series A Preferred  Stock and such costs have been charged to  additional
paid-in capital.                                                                

                                                                               8


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Note 3 - Sale of ESS                                                            

Effective  March  19,  1999,  the  Company  sold 75% of its stock  ownership  in
Environmental   Support  Solutions  ("ESS")  to  one  of  ESS's  founders.   The
consideration  for the Company's sale of its interest was $100,000 in cash and a
six  year  6%  interest  bearing  note  in the  amount  of  $380,000.  It is not
anticipated that the Company will be involved in, or control,  the operations of
ESS. The Company will recognize as income the portion of the proceeds associated
with the net  receivables  upon the  receipt  of cash.  This sale did not have a
material effect on the Company's financial condition or results of operations.  

                                                                               9


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Hudson Technologies, Inc. and subsidiaries
 Management's Discussion and Analysis of Financial Condition
 and Results of Operations

Safe Harbor Statement Under The Private Securities Litigation Reform Act of 1995

Certain  statements  contained in this section and elsewhere in this Form 10-QSB
constitute  "forward  looking  statements"  within the  meaning  of the  Private
Securities  Litigation  Reform  Act of  1995.  Such  forward-looking  statements
involve a number of known and unknown  risks,  uncertainties  and other  factors
which may cause the actual  results,  performance or achievements of the Company
to be materially different from any future results,  performance or achievements
expressed or implied by such forward-looking  statements.  Such factors include,
but are not limited  to,  changes in the  markets  for  refrigerants  (including
unfavorable market conditions  adversely affecting the demand for, and the price
of  refrigerants),  regulatory and economic factors,  seasonality,  competition,
litigation,  the  nature of  supplier  or  customer  arrangements  which  become
available to the Company in the future,  adverse  weather  conditions,  possible
technological obsolescence of existing products and services, possible reduction
in the carrying value of long-lived assets,  estimates of the useful life of its
assets, potential environmental liability, customer concentration, uncertainties
related to the  Company's  year 2000  compliance  efforts and the ability of key
suppliers  and customers to be year 2000  compliant and other risks  detailed in
the Company's  other  periodic  reports filed with the  Securities  and Exchange
Commission.  The words "believe",  "expect",  "anticipate",  "may",  "plan", and
similar expressions  identify forward looking statements.  Readers are cautioned
not to place undue  reliance on these  forward-looking  statements,  which speak
only as of the date the statement was made.                                     

Overview                                                                        

Sales of  refrigerants  continue  to  represent  a  significant  portion  of the
Company's  revenues.  The Company  believes  that there will be a trend  towards
lower sales prices,  volume and gross profit margins on refrigerant sales in the
foreseeable  future,  which will continue to have an adverse effect on operating
results.                                                                        

Historically,  the Company has derived a majority of its revenues  from the sale
of  refrigerants.  The Company has changed its business  focus  towards  service
revenues   through   the   development   of  a   service   offering   known   as
RefrigerantSide(TM)  Services.  Pursuant to this change in business  focus,  the
Company has  developed a strategic  business plan and as of June 30, 1999 it has
begun to implement this plan. In addition, the Company also provides refrigerant
management  services,  consisting  principally  of recovery and  reclamation  of
refrigerants  used in commercial  air  conditioning,  industrial  processing and
refrigeration   systems.   While  refrigerant  sales  continue  to  represent  a
significant  portion of the  Company's  revenues,  the  Company  has  diverted a
substantial portion of its sales resources towards service sales.               

In March 1999,  the Company  completed the sale of its Series A Preferred  Stock
and  received net  proceeds of  $5,800,000.  The net proceeds of the sale of the
Company's  Series A  Preferred  Stock are being  used to  expand  the  Company's
service offering, and provide working capital,  through a network of depots that
provide a full  range of the  Company's  on site  RefrigerantSide(TM)  Services.
Management believes that these services represent the Company's long term growth
potential.  However,  in the short  term,  while the  Company  believes  it will
experience an increase in revenues from its  RefrigerantSide(TM)  Services, such
an  increase  will not be  sufficient  to  offset  a  substantial  reduction  in
refrigerant  revenue. The Company expects that it will incur additional expenses
and losses  during the coming  quarters  related to the  expansion  of its depot
network.                                                                        

The change in business focus towards revenues generated from service may cause a
material  reduction  in  revenues  derived  from  the sale of  refrigerants.  In
addition,  to the extent  that the Company is unable to obtain  refrigerants  on
commercially   reasonable   terms  or   experiences  a  decline  in  demand  for
refrigerants,  the Company could realize  reductions in refrigerant  processing,
and  possible  loss of revenues  which would have a material  adverse  affect on
operating results.                                                              

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Results of Operations                                                           

Three  months ended June 30, 1999 as compared to the three months ended June 30,
1998                                                                            

Revenues for the three months ended June 30, 1999 were $3,995,000, a decrease of
$4,825,000  or 55% from the  $8,820,000  reported  during  the  comparable  1998
period. The decrease was primarily attributable to lower revenues generated from
a principal  customer and the lack of revenues  from ESS,  which was sold during
the   first   quarter   of   1999,   partially   offset   by  an   increase   in
RefrigerantSide(TM)  Services revenue.  In addition,  during the 1999 period the
Company  experienced a short fall of product  availability  on a timely basis to
meet  certain  of its  refrigerant  sales.  If the  Company  is unable to obtain
product in the future,  the Company would  experience a reduction in refrigerant
revenues which would have a material adverse affect on operating results.       

Cost of sales for the three  months  ended  June 30,  1999  were  $3,002,000,  a
decrease of $3,721,000 or 55% from the $6,723,000 reported during the comparable
1998 period due mainly to a lower volume of refrigerant  sales.  As a percentage
of sales,  cost of sales were 75% of revenues  for the three month  period ended
June 30, 1999, a decrease from the 76% reported for the comparable  1998 period.
The  decrease  in cost of  sales  as a  percentage  of  revenues  was  primarily
attributable to a decrease in lower margin refrigerant sales.                   

Operating  expenses for the three months ended June 30, 1999 were $1,679,000,  a
decrease of $173,000 or 9% from the  $1,852,000  reported  during the comparable
1998  period.  The decrease was  primarily  attributable  to a lack of operating
expenses  attributed  to ESS  offset  by an  overall  increase  in  selling  and
depreciation and amortization expense.                                          

Other income  (expense) for the three months ended June 30, 1999 was ($101,000),
an increase of $14,000 from the ($87,000)  reported  during the comparable  1998
period.  Other  income  (expense)  includes  interest  expense of  $106,000  and
$114,000 for 1999 and 1998, respectively,  offset by other income of $85,000 and
$27,000  for 1999 and 1998,  respectively.  In  addition,  in 1999,  the Company
recognized  a loss on the sale of  equipment  in the  amount of  $80,000.  Other
income primarily relates to interest and lease rental income.                   

No  income  taxes  for the  three  months  ended  June 30,  1999  and 1998  were
recognized.  The Company recognized a reserve allowance against the deferred tax
benefit  for the 1999 and 1998  losses.  The tax  benefits  associated  with the
Company's net operating  loss carry  forwards  would be recognized to the extent
that the Company recognizes net income in future periods.                       

Net loss for the three months ended June 30, 1999 was  $787,000,  as compared to
net income of $158,000 reported during the comparable 1998 period.  The net loss
was primarily attributable to lower volume of refrigerant revenues.             

Six months ended June 30, 1999 as compared to the six months ended June 30, 1998

Revenues for the six months ended June 30, 1999 were  $9,027,000,  a decrease of
$6,498,000  or 42% from the  $15,525,000  reported  during the  comparable  1998
period. The decrease was primarily attributable to lower revenues generated from
a principal  customer and the lack of revenues  from ESS,  which was sold in the
first quarter of 1999,  partially  offset by an increase in  RefrigerantSide(TM)
Services revenue. In addition,  during the 1999 period the Company experienced a
short  fall of product  availability  on a timely  basis to meet  certain of its
refrigerant sales. If the Company is unable to obtain product in the future, the
Company would experience a reduction in refrigerant  revenues which would have a
material adverse affect on operating results.                                   

Cost of sales for the six months ended June 30, 1999 were $6,840,000, a decrease
of $4,567,000 or 40% from the  $11,407,000  reported  during the comparable 1998
period due mainly to a reduction in the volume of lower margin  refrigerant  and
service  revenues.  As a percentage of sales, cost of sales were 76% of revenues
for the six-month  period ended June 30, 1999, an increase from the 74% reported
for the comparable 1998 period. The increase in cost of sales as a percentage of
revenues was primarily  attributable to an increase in labor and other operating
costs.                                                                          

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Operating  expenses  for the six months ended June 30, 1999 were  $3,651,000,  a
decrease of $108,000 or 3% from the  $3,759,000  reported  during the comparable
1998  period.  The decrease was  primarily  attributable  to a lack of operating
expenses  from ESS  offset  by an  increase  in  selling  and  depreciation  and
amortization expense.                                                           

Other income (expense) for the six months ended June 30, 1999 was ($179,000), an
increase of $33,000 from the  ($146,000)  reported  during the  comparable  1998
period.  Other  income  (expense)  includes  interest  expense of  $208,000  and
$198,000 for 1999 and 1998, respectively, offset by other income of $109,000 and
$52,000  for 1999 and 1998,  respectively.  In  addition,  in 1999,  the Company
recognized  a loss on the sale of  equipment  in the  amount of  $80,000.  Other
income primarily relates to interest and lease rental income.                   

No income taxes for the six months ended June 30, 1999 and 1998 were recognized.
The Company  recognized a reserve allowance against the deferred tax benefit for
the 1999 and 1998 losses.  The tax benefits  associated  with the  Company's net
operating loss carry forwards would be recognized to the extent that the Company
recognizes net income in future periods.                                        

Net loss for the six months ended June 30, 1999 was  $1,643,000,  as compared to
the net income of $213,000  reported  during the  comparable  1998  period.  The
increase in net loss was primarily  attributable  to lower volume on refrigerant
sales revenues.                                                                 

Liquidity and Capital Resources                                                 

At June 30, 1999, the Company had working capital of  approximately  $3,558,000,
an increase of  $3,505,000  from the $53,000 of working  capital at December 31,
1998. The increase in working  capital is primarily  attributable to the sale of
the Company's Series A Convertible Preferred Stock pursuant to which the Company
received net proceeds of $5,800,000  offset by the net loss incurred  during the
six months  ended June 30,  1999.  A principal  component  of current  assets is
inventory.  At June 30, 1999,  the Company had  inventories  of $ 4,693,000,  an
increase of  $1,409,000  or 43% from the  $3,284,000  at December 31, 1998.  The
Company's  ability to sell and replace its  inventory  on a timely basis and the
prices at which it can be sold are  subject,  among  other  things,  to  current
market  conditions  and the nature of  supplier or  customer  arrangements  (See
Seasonality and Fluctuations in Operating Results). The Company has historically
financed its working capital  requirements  through cash flows from  operations,
the  issuance  of debt and equity  securities,  bank  borrowings  and loans from
officers.                                                                       

Net cash used by  operating  activities  for the six months ended June 30, 1999,
was  $3,779,000  compared  with net cash  provided by  operating  activities  of
$779,000 for the comparable 1998 period.  Net cash used by operating  activities
was attributable  mainly to the increase of inventories,  trade  receivables,  a
decrease in accounts  payable and accrued  expenses  and by the net loss for the
1999 period.                                                                    

Net cash used by  investing  activities  for the six months ended June 30, 1999,
was $1,209,000  compared with net cash used by investing  activities of $312,000
for the prior comparable 1998 period. The net cash usage consisted  primarily of
equipment  additions  primarily  associated  with  the  expansion  of the  depot
network.                                                                        

Net cash  provided by  financing  activities  for the six months  ended June 30,
1999,  was  $6,701,000  compared  with net cash used by financing  activities of
$309,000  for the  comparable  1998 period.  The net cash  provided by financing
activities primarily consisted of proceeds from the sale of the Company's Series
A  Preferred  Stock and  proceeds  from  long and  short  term debt for the 1999
period.                                                                         

At June 30, 1999, the Company had cash and equivalents of $2,489,000.           

During 1996,  the Company  mortgaged  its  property and building  located in Ft.
Lauderdale with Turnberry  Savings Bank, NA. The mortgage balance of $668,000 at
June 30,  1999  bears  interest  rate of 9.25%  and is  repayable  over 20 years
through January 2017. The Company has principally  ceased its operations at this
facility  and has  entered  into a three year lease of the entire  facility at a
current  level of $12,500 per month to an  unrelated  third  party.  The Company
expects to sell this  property  in the  foreseeable  future.                    

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During 1996, the Company obtained financing from two lending  institutions which
enabled it to rent an  additional  $1.7  million  of  equipment  under  terms of
operating leases.  Hudson utilized these facilities to acquire automated aerosol
packaging equipment of approximately  $1,000,000,  ten refrigerant gas bulk-tank
storage  units of  approximately  $400,000,  and other  industrial  equipment of
$300,000.  In July, 1999 the Company sold the aerosol packaging  equipment to an
unrelated  third  party  and has  correspondingly  reduced  the  balance  of the
remaining  payments under the lease related to these assets.  During the quarter
ended June 30, 1999,  the Company  recognized an $80,000 loss on the sale of the
equipment.                                                                      

During January 1997,  the Company  entered into a month to month lease of, and a
contract to purchase,  a 29,000  square foot  facility on 5.15 acres in Congers,
New York for  approximately  $1.4  million;  subject to approvals and ability to
obtain  financing.  In October 1998, the Company cancelled the contract pursuant
to its  contingency  provision.  In  June  1999,  the  Company  entered  into an
agreement  with the landlord to terminate the month to month lease.  Pursuant to
that agreement, the Company vacated that facility effective August 1, 1999.     

The sale, by the Company,  of the aerosol packaging  equipment  contained in the
Congers  facility and the exit from the Congers facility is not expected to have
a material  adverse  effect on the  Company's  financial  position or results of
operations  because the Company  believes  that it will continue to sell certain
refrigerants without the use of the aerosol packaging equipment.  However, there
can be no assurance  that the Company will be able to sell certain  refrigerants
and  offset  the  loss of  revenues  due to the  sale of the  aerosol  packaging
equipment and the exit of the Congers facility.                                 

On  April  28,  1998,  the  Company  entered  into a  credit  facility  with CIT
Group/Credit Finance Group, Inc. ("CIT") which makes available borrowings to the
Company  of up to  $6,500,000.  The  facility  requires  minimum  borrowings  of
$1,250,000.  The facility provides for a revolving line of credit and a six-year
term loan and expires in April 2001. Advances under the revolving line of credit
are limited to (i) 80% of eligible  trade  accounts  receivable  and (ii) 50% of
eligible  inventory  (which  inventory  amount shall not exceed 200% of eligible
trade accounts  receivable or $3,250,000).  As of June 30, 1999, the Company has
availability  under its revolving  line of credit of  approximately  $1,495,000.
Advances, available to the Company, under the term loan (currently approximately
$779,000) are based on existing fixed asset valuations and future advances under
the  term  loan up to an  additional  $1,000,000  are  based on  future  capital
expenditures.  As of June 30, 1999, the Company had $2,326,000 outstanding under
this facility.  The facility bears interest at the prime rate plus 1.5%, (10.25%
at June 30, 1999) and  substantially  all of the Company's assets are pledged as
collateral  for  obligations  to CIT.  In  addition,  among  other  things,  the
agreements restrict the Company's ability to declare or pay any dividends on its
capital stock.  The Company has obtained a waiver from CIT to permit the payment
of dividends on its Series A Preferred Stock.                                   

In connection  with the loan  agreements,  the Company issued to CIT warrants to
purchase 30,000 shares of the Company's  common stock at an exercise price equal
to 110% of the  then  fair  market  value  of the  stock,  which  on the date of
issuance  was $4.33 per share,  and  expires  April 29,  2001.  The value of the
warrants were not deemed to be material.                                        

Effective  March  19,  1999,  the  Company  sold 75% of its stock  ownership  in
Environmental   Support  Solutions  ("ESS")  to  one  of  ESS's  founders.   The
consideration  for the Company's sale of its interest was $100,000 in cash and a
six  year  6%  interest  bearing  note  in the  amount  of  $380,000.  It is not
anticipated that the Company will be involved in, or control,  the operations of
ESS. The Company will recognize as income the portion of the proceeds associated
with the net  receivables  upon the  receipt  of cash.  This sale did not have a
material effect on the Company's financial condition or results of operation.   

The Company is continuing to evaluate  opportunities  to  rationalize  its other
operating  facilities  based on its  emphasis  on the  expansion  of its service
sales. As a result,  the Company may  discontinue  certain  operations  which it
believes do not support the growth of service  sales and, in doing so, may incur
future charges to exit certain operations.                                      

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On March 16, 1999, the  shareholders of the Company approved an amendment to the
Certificate of Incorporation to authorize the issuance of up to 5,000,000 shares
of Preferred Stock. This  authorization  allows the Board of Directors to, among
other things,  set the number of shares, the dividend rate and the voting rights
on any issuance of Preferred Stock without further shareholder approval.        

On March 30, 1999, the Company completed the sale of 65,000 shares of its Series
A Preferred  Stock,  with a liquidation  value of $100 per share,  to Fleming US
Discovery  Fund III,  L.P. and Fleming US Discovery  Offshore Fund III, L.P. The
gross  proceeds  from the  sale of the  Preferred  Stock  were  $6,500,000.  The
Preferred  Stock has voting  rights on an as if converted  basis.  The number of
votes  applicable  to the  Series A  Preferred  Stock is equal to the  number of
shares  of  common  stock  into  which  the  Series  A  Preferred  Stock is then
convertible.  However,  the holders of the Preferred  Stock will provide the CEO
and  Secretary  of the  Company a proxy to vote all shares  currently  owned and
subsequently  acquired  above  29% of  the  votes  entitled  to be  cast  by all
shareholders of the Company.  The Preferred Stock carries a dividend rate of 7%,
which will increase to 16% on the fifth anniversary date, and converts to Common
Stock at a rate of $2.375  per  share,  which was 27% above the  closing  market
price of Common Stock as of March 29, 1999. The  conversion  rate may be subject
to certain antidilution provisions. The Company engaged an advisor to facilitate
the Company's  efforts in connection with this  transaction.  In addition to the
advisor  fees of  $560,000,  the  Company  issued to the  advisor,  warrants  to
purchase  136,842 shares of the Company's  Common Stock at an exercise price per
share of $2.73.  The  Company is using the net  proceeds  from the  issuance  of
Preferred  Stock to expand  its  RefrigerantSide(TM)  Services  and for  working
capital purposes.                                                               

The  Company  will pay  dividends,  in arrears,  on the  Preferred  Stock,  semi
annually,  either in cash or additional shares, at the Company's option,  during
the first two years after which  dividends will be paid in cash. The Company may
redeem the Preferred  Stock on March 31, 2004 either in cash or shares of Common
Stock valued at 90% of the average  trading price of the Common Stock for the 30
days  preceding  March 31, 2004. In addition,  after March 30, 2001, the Company
may call the Preferred Stock if the market price of the Common Stock is equal to
or greater  than 250% of the  conversion  price and the Common  Stock has traded
with an average  daily volume in excess of 20,000  shares for a period of thirty
consecutive days.                                                               

The Company has provided certain  registration,  preemptive and tag along rights
to the  holders of the  Preferred  Stock.  The holders of the  Preferred  Stock,
voting as a  separate  class,  have the right to elect up to two  members to the
Company's  Board  of  Directors  or at  their  option,  to  designate  up to two
observers to the Company's  Board of Directors who will have the right to attend
and observe  meetings of the Board of  Directors.  Currently,  the holders  will
elect two members to the Board of Directors.                                    

The Company  incurred an aggregate of $700,000 in costs associated with the sale
of the Series A Preferred  Stock and such costs have been charged to  additional
paid-in capital.                                                                

The  Company  believes  that its cash flow from  operations,  together  with the
proceeds from the sale of its Series A Preferred Stock, and its credit facility,
will be sufficient to satisfy the Company's  working  capital  requirements  and
proposed  expansion of its service  business for the next year.  Any  additional
expansion or acquisition  opportunities  that may arise in the future may affect
the Company's future capital needs. However, there can be no assurances that the
Company's  proposed or future  expansion plans will be successful,  and as such,
the Company may have further capital needs.                                     

Reliance on Suppliers and Customers                                             

The  Company's  financial  performance  is in part  dependent  on its ability to
obtain  sufficient  quantities  of  virgin  and  reclaimable  refrigerants  from
manufacturers,  wholesalers,  distributors,  bulk gas  brokers,  and from  other
sources within the air conditioning and refrigeration and automotive aftermarket
industries, and on corresponding demand for refrigerants. To the extent that the
Company is unable to obtain sufficient quantities of refrigerants in the future,
or resell reclaimed  refrigerants at a profit, the Company's financial condition
and results of operations would be materially adversely affected.               

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During January 1997, the Company  entered into  agreements with DuPont to market
DuPont's SUVA(TM) refrigerants. Under the agreement, 100% of virgin refrigerants
provided to specified market segment customers must be purchased from DuPont.   

During the six months  ended  June 30,  1999,  two  customers  accounted  for an
aggregate of 29% of the Company's revenues. During the six months ended June 30,
1998, two customers accounted for an aggregate of 51% of the Company's revenues.
The loss of a principal  customer  or a decline in the  economic  prospects  and
purchases  of the  Company's  products  or  services  by any such  customer,  as
incurred  in  1999,  would  have a  material  adverse  effect  on the  Company's
financial position and results of operations.                                   

Seasonality and Fluctuations in Operating Results                               

The  Company's  operating  results  vary  from  period  to period as a result of
weather   conditions,   requirements  of  potential   customers,   non-recurring
refrigerant and service sales,  availability  and price of refrigerant  products
(virgin or  reclaimable),  changes in reclamation  technology  and  regulations,
timing in introduction and/or retrofit or replacement of CFC-based refrigeration
equipment  by  domestic  users of  refrigerants,  the rate of  expansion  of the
Company's  operations,   and  by  other  factors.  The  Company's  business  has
historically  been seasonal in nature with peak sales of refrigerants  occurring
in the first half of each year. Accordingly, the second half of the year results
of operations  have reflected  additional  losses due to a decrease in revenues.
Delays in securing  adequate  supplies of  refrigerants  at peak demand periods,
lack of refrigerant demand, increased expenses, declining refrigerant prices and
a loss of a principle customer could result in significant losses.  There can be
no assurance that the foregoing  factors will not occur and result in a material
adverse affect on the Company's financial position and significant losses.      

Year 2000 Compliance                                                            

The Company uses various types of technology in the  operations of its business.
Some of this technology  incorporates date  identification  functions;  however,
many of these  date  identification  functions  were  developed  to use only two
digits  to  identify  a  year.  These  date  identifications  functions,  if not
corrected,  could cause their related  technologies to fail or create  erroneous
results on or before January 1, 2000.                                           

The Company is currently  assessing and modifying its computer,  production  and
facility  systems  and  business   processes  to  provide  for  their  continued
functionality  at the Year 2000.  The Company is also  continuing  to assess the
readiness  of third  parties  and is seeking to address the Year 2000 issue with
those entities.  However, the Company has limited knowledge of the readiness and
has no control over the actions taken by these parties,  and accordingly,  there
can be no assurance  that all third parties with which the Company does business
will successfully  resolve all of their Year 2000 compliance issues. The Company
is augmenting previously scheduled computer maintenance with procedures designed
to locate and correct Year 2000 problems.  The Company  continues to expect that
substantially all new system upgrades or reprogramming efforts will be completed
before December 31, 1999. The costs  associated  with these  procedures have not
been and are not expected to be material to the Company's financial condition or
results of operations and such costs have been expensed as incurred.            

The Company believes that  modification of existing  software and conversions to
new  software  should  result  in  Year  2000  compliance.  However,  given  the
complexity and potential unknowns of the Year 2000 issue, the impact on business
operations  due to failure by the  Company to achieve  compliance  or failure by
external entities,  such as suppliers and vendors, to achieve compliance,  which
the Company cannot control,  could adversely affect the Company's future results
of  operations.  There can be no  assurance  that the  Company  will be entirely
successful with its compliance.                                                 

The  Company's  intention  is to  address  its Year 2000  issues  prior to being
affected by them. The Company has attempted to identify its exposure to the Year
2000 issue but there may be other unforeseen risks that the Company may not have
identified. However, if the Company identifies significant risks associated with
Year                                                                            

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2000 compliance  issues or if the progress of its current projects deviates from
the expected timeline, the Company will develop a contingency plan at that time.
There can be no assurance that the Company's  plans or contingency  plan will be
entirely successful.                                                            

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PART II. OTHER INFORMATION
Hudson Technologies, Inc. and subsidiaries

Item 1. Legal Proceedings                                                       

During  June 1995,  United  Water of New York Inc.  ("United")  alleged  that it
discovered  that  two of its  wells  within  close  proximity  to the  Company's
facility  showed  elevated  levels of  refrigerant  contamination,  specifically
trichlorofluoromethane  (R-11).  During June 1996,  United  notified the Company
that it was seeking indemnification by the Company for costs incurred to date as
well as costs expected to be incurred in connection  with United taking remedial
action.  During July 1996,  United  threatened to institute  legal action in the
event that the Company declined to settle this matter.                          

During  August  1996,  the  Company  received  a letter  from the New York State
Department  of  Environmental  Conservation  ("DEC")  which stated that,  in the
opinion of DEC,  the  Company  was the cause of the  contamination  of  United's
wells.  The  DEC  letter  stated  that  it is not  aware  of the  extent  of the
contamination or how the refrigerants entered the groundwater.                  

During December 1996, the Company and United entered into an interim  settlement
agreement which provided for (a) reimbursement  ($84,000) of United's  operating
costs  associated  with certain wells through  August 1996,  (b)  reimbursement,
subject to a dollar cap of $12,650  per month,  of  United's  monthly  operating
costs for  certain  wells  from  September  1996  through  April  1997,  and (c)
continued   monitoring  of  R-11  refrigerant   groundwater  levels.  Under  the
agreement,  United agreed not to commence legal action against the Company prior
to May 1, 1997.  Neither  party  waived  their rights as a result of the interim
agreement.                                                                      

During   December   1997,   United   alleged  that  it   discovered   levels  of
Dichlorodifluoromethane (R-12) in two of its wells within close proximity to the
Company's facility, and has alleged that the Company is the source.  Sampling by
the  Company  of  various   monitoring  wells  installed  around  the  Company's
facilities  have been taken on a monthly basis since August 1996 and have failed
to detect any  levels of R-12 in the  groundwater  in and  around the  Company's
facility.                                                                       

During  August and  September  1997,  various  proposals  for  possible  further
remediation  were discussed with the DEC and United in light of the reduction of
levels of R-11 in United's Wells. From August 1997 through March 1999 the levels
of R-11 remained nearly non-detectable and well under minimum contaminant levels
established  by the State of New York.  In January 1998,  the Company  agreed to
install a remediation  system at the Company's  facility to remove any remaining
R-11  levels in the  groundwater  under and around the  Company's  facility.  In
August 1998 the DEC  accepted the  Company's  proposal  and  requested  that the
Company  proceed  with  the  installation  of  the  system.  The  cost  of  this
remediation system was estimated to be approximately $100,000.                  

In June 1998,  United  commenced  an action  against  the Company in the Supreme
Court of the State of New York,  Rockland County,  seeking damages in the amount
of $1.2 million  allegedly  sustained as a result of the foregoing.  In December
1998,  United  served an amended  complaint  asserting  a claim  pursuant to the
Resource  Conservation and Recovery Act, 42 U.S.C. ss. 6901, et. seq.  ("RCRA").
The Company  maintains  that the  allegations in the complaint are without merit
and that the damages  claimed by United are  significantly  overstated  and bear
little  relation to any damages that United  allegedly  sustained.  A motion has
been filed on behalf of the Company to dismiss  the RCRA cause of action,  which
motion has been pending since March 1999.                                       

On April 1, 1999, the Company reported a release at the Company's Hillburn,  New
York facility of what was ultimately  determined to be approximately  7,800 lbs.
of R-11, as a result of a failed hose connection to one of the Company's outdoor
storage tanks allowing  liquid R-11 to discharge from the tank into the concrete
secondary  containment area in which the subject tank was located.  An amount of
the R-11  escaped  the                                                          

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secondary  containment  area  through  an open  drain for  removing  accumulated
rainwater and entered the ground. The Company immediately  commenced  excavation
operations to remove  contaminated soil and has taken a number of other steps to
mitigate and minimize contamination,  including acceleration of the installation
of the planned remediation system.                                              

In April 1999,  the  Company was advised by United that one of its wells  within
close  proximity to the Company's  facility  showed  elevated  levels of R-11 in
excess of 200 ppb. and was taking certain steps and would be incurring  costs in
an attempt to  remediate  any  contamination.  In response to the  release,  the
Company requested,  and in May 1999, received permission from the DEC to operate
the system pending  negotiation and finalization of a Consent Order covering the
operation of the system. The remediation system was put into operation on May 7,
1999. The level of R-11 in United's Well have steadily  decreased  since June 1,
1999 after rising to a level in excess of 700 ppb. The Company continues to work
with the DEC,  United and with the  Company's  experts to determine the scope of
any contamination, and to develop and implement plans to deal with and remediate
any such contamination.                                                         

In May 1999,  United  submitted  supplemental  affidavits  and  exhibits  to the
Rockland  County Supreme Court in connection  with the Company's  pending motion
which  relate  to the April 1,  1999  release.  The  Company  responded  to that
supplemental  information,  and the motion remains pending. In July 1999, United
filed a motion  seeking  permission  to amend its  complaint  in that  action to
allege facts  relating to, and to seek damages  allegedly  resulting  from,  the
April 1, 1999 release. The Company has not yet responded to that motion.        

The Company carries $1,000,000 of pollution  liability  insurance per occurrence
and has put the  insurance  carrier on notice of the R-11  release and  possible
claims of United.  There can be no assurance that this action, or any settlement
thereof,  will be resolved in a manner  favorable  to the  Company,  or that the
ultimate outcome of any legal action or settlement,  or the effects of the April
1, 1999  release,  will not have a  material  adverse  effect  on the  Company's
financial condition and results of operations.                                  

During March and April,  1998, six (6) complaints,  each alleging  violations of
Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, were filed by a
total of eight  shareholders,  on behalf of themselves and all others  similarly
situated,  against the Company and certain of its officers and  directors in the
United States District Court for the Southern  District of New York. Each of the
complaints  alleges  that the  defendants,  among other  things,  misrepresented
material  information about the Company's  financial results and prospects,  and
its customer relationships.  The complaints in five of these actions seek relief
on behalf of persons  purchasing  common stock between August 8, 1995 and August
15,  1997,  and the  complaint  in the sixth  action  seeks  relief on behalf of
persons  purchasing common stock between March 31, 1997 and August 15, 1997. The
Company  maintains that the allegations of wrongdoing  alleged in the complaints
are without merit.  The Company intends to vigorously  defend the claims brought
against it and has  retained  the law firm of Davis,  Polk and Wardwell for that
defense.  A motion has been made on behalf of the  Company to dismiss the claims
asserted, which motion has been pending since March 1999.                       

There can be no assurance that any of these actions,  or the settlement thereof,
will be resolved in a manner  favorable  to the  Company,  or that the  ultimate
outcome  of any legal  action or  settlement  will not have a  material  adverse
effect on the Company's financial condition and results of operations.          

In May 1998,  an action was  commenced in the Supreme  Court of the State of New
York, Rockland County, by BNY Financial  Corporation ("BNY") against the Company
seeking  damages in the amount of $49,051 for legal fees and expenses  allegedly
incurred in connection with certain financial  dealings and discussions  engaged
in between the  Company  and BNY.  The  Company  denies any  liability  for such
expenses  and  intends to defend the action  vigorously,  and has also  asserted
counterclaims  seeking the return of certain  fees paid by the Company to BNY in
connection with those financial dealings. BNY has filed a motion seeking summary
judgment against the Company, which motion is now pending.                      

There can be no assurance that this action, or any settlement  thereof,  will be
resolved  in a manner  favorable  to the  Company.                              

                                                                              18


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In June 1999, an action was commenced in the 19th Judicial  District Court, East
Baton Rouge Parish, State of Louisiana,  on behalf of four individuals,  against
the Company seeking  unspecified damages for alleged personal injuries allegedly
suffered as a result of an ammonia release at the Company's  Louisiana  facility
in January 1999. The Company maintains that the allegations in the complaint are
without  merit.  The  Company  has  retained  counsel and intends to defend this
action vigorously.                                                              

There can be no assurance that this action, or any settlement  thereof,  will be
resolved  in a manner  favorable  to the  Company.                              

Hudson  Technologies  and its  subsidiaries  are subject to various other claims
and/or  lawsuits  from both private and  governmental  parties  arising from the
ordinary course of business; none of which are material.                        

Item 2. Changes in Securities and Use of Proceeds                               

During the three  months  ended June 30, 1999,  the Company  granted  options to
purchase 78,500 shares of common stock to certain employees pursuant to its 1997
Stock Option Plan.  The Company  relied on Section 4(2) under the Securities Act
of 1933 as transactions by an issuer not involving a public offering.           

Item 6. Exhibits and Reports on Form 8-K                                        

(a) The following exhibits are attached to this report:               

     Exhibit 3.1:  Certificate of Amendment of the Certificate of  Incorporation
dated March 16, 1999                                                  

     Exhibit 3.2:  Certificate  of  Correction of the  Certificate  of Amendment
dated March 25, 1999                                                  

     Exhibit 3.3:  Certificate of Amendment of the Certificate of  Incorporation
dated March 29, 1999                                                  

Exhibit 27: Financial Data Schedule (for SEC use only)                

 (b) No report on Form 8-K filed during the quarter ended June 30, 1999.

                                                                              19


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Hudson Technologies, Inc. and subsidiaries
Form 10-QSB of June 30, 1999

SIGNATURES

     Pursuant to the  requirements  of the Securities  Exchange Act of 1934, the
registrant  has duly  caused  this  Report  to be  signed  in its  behalf by the
undersigned, thereunto duly authorized.                                         

 HUDSON TECHNOLOGIES, INC.

              By: /s/ Kevin J. Zugibe    August 12, 1999
                  --------------------------------------
                 Kevin J. Zugibe          Date
               Chairman, CEO and President

              By: /s/ Brian F. Coleman   August 12, 1999
                  --------------------------------------
                 Brian F. Coleman         Date
      Vice President and
           Chief Financial Officer

                                                                              20

Dates Referenced Herein   and   Documents Incorporated by Reference

Referenced-On Page
This ‘10QSB’ Filing    Date First  Last      Other Filings
3/31/0481410QSB,  4
4/29/0113
3/30/01814
1/1/0015
12/31/9961510KSB
Filed on:8/13/99
8/12/9920
8/1/9913
For Period End:6/30/99120
6/15/998
6/1/9918
5/7/9918
4/1/991718
3/30/998143
3/29/99819
3/25/9919
3/19/99613
3/16/99819DEFS14A
1/1/998
12/31/9861210KSB
6/30/9861510QSB
4/28/9813
8/15/9718
5/1/9717
3/31/971810KSB40,  10QSB,  10QSB/A
8/8/9518
 List all Filings 

7 Subsequent Filings that Reference this Filing

  As Of               Filer                 Filing    For·On·As Docs:Size             Issuer                      Filing Agent

 3/14/24  Hudson Technologies Inc./NY       10-K       12/31/23   80:7.9M                                   Toppan Merrill/FA2
 3/14/23  Hudson Technologies Inc./NY       10-K       12/31/22   77:7.2M                                   Toppan Merrill/FA2
 1/13/23  Hudson Technologies Inc./NY       S-3                    5:831K                                   Toppan Merrill/FA
 3/24/22  Hudson Technologies Inc./NY       10-K       12/31/21   83:7.8M                                   Toppan Merrill/FA2
 3/12/21  Hudson Technologies Inc./NY       10-K       12/31/20   80:6.4M                                   Toppan Merrill/FA
 1/12/21  Hudson Technologies Inc./NY       S-3/A                  2:280K                                   Toppan Merrill/FA
12/23/20  Hudson Technologies Inc./NY       S-3                    4:821K                                   Toppan Merrill/FA
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