Hudson
Annual Report 2012

Plain-text annual report

Morningstar® Document Research℠ FORM 10-KHUDSON TECHNOLOGIES INC /NY - HDSNFiled: March 05, 2013 (period: December 31, 2012)Annual report with a comprehensive overview of the companyThe information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The userassumes all risks for any damages or losses arising from any use of this information, except to the extent such damages or losses cannot belimited or excluded by applicable law. Past financial performance is no guarantee of future results. UNITED STATESSecurities and Exchange CommissionWashington, D.C. 20549 Form 10-K x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2012 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 registrant as specified in its charter) New York13-3641539(State or Other Jurisdiction of Incorporation or Organization)(I.R.S. Employer Identification No.) P.O. Box 1541 One Blue Hill Plaza Pearl River, New York10965(Address of Principal Executive Offices)(Zip Code) Registrant’s telephone number, including area code(845) 735-6000 Securities registered pursuant to Section 12(b) of the Act: Title of each class Name of each Exchange on which RegisteredCommon stock, $.01 par value The NASDAQ Stock Market LLC (NASDAQ Capital Market) Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act ¨¨ Yes xx No Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act ¨¨ Yes xx No 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 duringthe 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 requirementsfor the past 90 days. xx Yes ¨¨ No Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required tobe submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that theregistrant was required to submit and post such files). xx Yes ¨¨ No Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the bestof registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form10-K. xx Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See thedefinitions of “large accelerated filer”, “accelerated filer”, and “smaller reporting company” in Rule12b-2 of the Exchange Act. Large accelerated filer ¨Accelerated filer ¨Non-accelerated filer ¨Smaller reporting company x (Do not check if a smaller reporting company) Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). ¨¨ Yes xx No The aggregate market value of registrant’s common stock held by non-affiliates at June 30, 2012 was approximately $68,137,614. As of March 1, 2013 therewere 24,177,258 shares of the registrant’s common stock outstanding.Source: HUDSON TECHNOLOGIES INC /NY, 10-K, March 05, 2013Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Documents incorporated by reference: None Source: HUDSON TECHNOLOGIES INC /NY, 10-K, March 05, 2013Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Hudson Technologies, Inc. Index PartItemPage Part I.Item 1 -Business3 Item 1A -Risk Factors9 Item 1B -Unresolved Staff Comments11 Item 2 -Properties11 Item 3 -Legal Proceedings12 Item 4 -Mine Safety Disclosures12 Part II.Item 5 -Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of EquitySecurities13 Item 6 -Selected Financial Data13 Item 7 -Management's Discussion and Analysis of Financial Condition and Results of Operations14 Item 7A -Quantitative and Qualitative Disclosures About Market Risk18 Item 8 -Financial Statements and Supplementary Data19 Item 9 -Changes in and Disagreements with Accountants on Accounting and Financial Disclosure19 Item 9A -Controls and Procedures19 Item 9B -Other Information19 Part III.Item 10 -Directors, Executive Officers and Corporate Governance20 Item 11 -Executive Compensation22 Item 12 -Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters27 Item 13 -Certain Relationships and Related Transactions, and Director Independence29 Item 14 -Principal Accounting Fees and Services29Part IV.Item 15 -Exhibits, Financial Statement Schedules30 Signatures51 2Source: HUDSON TECHNOLOGIES INC /NY, 10-K, March 05, 2013Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Part IItem 1. Business General Hudson Technologies, Inc., incorporated under the laws of New York on January 11, 1991, is a refrigerant services company providing innovative solutionsto recurring problems within the refrigeration industry. The Company's products and services are primarily used in commercial air conditioning, industrialprocessing and refrigeration systems, and include (i) refrigerant sales, (ii) refrigerant management services consisting primarily of reclamation of refrigerantsand (iii) RefrigerantSide® Services performed at a customer's site, consisting of system decontamination to remove moisture, oils and other contaminants. Inaddition, RefrigerantSide® Services include predictive and diagnostic services for industrial and commercial refrigeration applications, which are designed topredict potential catastrophic problems and identify inefficiencies in an operating system. The Company’s Chiller Chemistry®, Chill Smart®, FluidChemistry® and Performance Optimization are predictive and diagnostic service offerings. As a component of the Company’s products and services, theCompany also participates in the generation of carbon offset projects. See “Carbon Offset Projects.” The Company operates principally through its wholly-owned subsidiary, Hudson Technologies Company. Unless the context requires otherwise, references to the “Company”, “Hudson”, “we", “us”, “our”, orsimilar pronouns refer to Hudson Technologies, Inc. and its subsidiaries. The Company's executive offices are located at One Blue Hill Plaza, Pearl River, New York and its telephone number is (845) 735-6000. Industry Background The production and use in the United States of refrigerants containing hydrochlorofluorocarbons (“HCFC”), the most commonly used refrigerants, andchlorofluorocarbons (“CFC") are subject to extensive regulation under the Clean Air Act, as amended (the “Act”). The Act, which was amended in 1990 inresponse to evidence linking damage to the earth’s ozone layer to the use of CFC and HCFC refrigerants, prohibits any person in the course of maintaining,servicing, repairing and disposing of air conditioning or refrigeration equipment, to knowingly vent or otherwise release or dispose of ozone depletingsubstances used as refrigerants. That prohibition of venting and releasing also applies to substitute, non-ozone depleting refrigerants, such asHydrofluorocarbons (“HFC”). The Act also requires the recovery of all refrigerants used in residential, commercial and industrial air conditioning andrefrigeration systems, and effective January 1, 1996, prohibited production of virgin (new) CFC refrigerants and limited the production of virgin (new)HCFC refrigerants. Effective January 2004, the Act further limited the production of virgin HCFC refrigerants, and federal regulations were enacted whichestablished production and consumption allocations for HCFC refrigerants and imposed limitations on the importation of certain virgin HCFC refrigerants.Additionally, effective January 2010, the Act further limited the production of virgin HCFC refrigerants and additional federal regulations were enacted whichimposed further limitations on the use, production and importation of certain virgin HCFC refrigerants. As a result of certain litigation, the federal regulationsimplementing the January 2010 phase down schedule have been vacated and in July 2011 the United States Environmental Protection Agency (“EPA”) recastproduction and consumption allocations for the 2011 year. In January 2012, a proposed rule was issued by the EPA to address production and consumptionallocations for the 2012, 2013 and 2014 years. A final rule to address production and consumption allocations for the 2012, 2013 and 2014 years has not yetbeen issued by the EPA. See “Recent Developments.” Under the Act, production of certain virgin HCFC refrigerants is scheduled to be phased out by theyear 2020, and production of all HCFC refrigerants is scheduled to be phased out by 2030. Under the Act, owners, operators and companies servicing coolingequipment are responsible for the integrity of the systems, regardless of the refrigerant being used, and for the responsible management of refrigerant. HFC refrigerants are used as substitutes for CFC and HCFC refrigerants in certain applications. As a result of the increasing restrictions and limitations on theproduction and use of CFC and HCFC refrigerants, various segments of the air conditioning and refrigeration industry have been replacing or modifyingequipment that utilize CFC and HCFC refrigerants and have been transitioning to equipment that utilize HFC refrigerants and a certain type of HFC’s knownas hydrofluoro-olefins (“HFO”). HFC refrigerants are not ozone depleting chemicals and are not currently regulated under the Act. However, certain HFCrefrigerants are highly weighted greenhouse gases that are believed to contribute to global warming and climate change and, as a result, are now subject tovarious state and federal regulations relating to the sale, use and emissions of HFC refrigerants. In addition, federal legislation has been proposed that, ifenacted, would impose limitations on the production and importation of certain virgin HFC refrigerants. The Company expects that HFC refrigerantseventually will be replaced by HFOs or other types of products with low global warming potentials. The Act, and the federal regulations enacted under authority of the Act, have mandated and/or promoted responsible use practices in the air conditioning andrefrigeration industry, which are intended to minimize the release of refrigerants into the atmosphere and encourage the recovery and re-use of refrigerants. Inaddition to prohibiting the venting of CFC and HCFC refrigerants, and prohibiting and/or phasing down the production of CFC and HCFC refrigerants, theAct mandates the recovery of these refrigerants and also promotes and encourages re-use and reclamation of CFC and HCFC refrigerants. Since January1996, when virgin CFC production became prohibited, nearly the entire service demand for CFC refrigerants in existing equipment has been met through therecovery and the reclamation of used CFC refrigerants by the EPA certified reclaimers. In addition, in December 2009, the EPA issued regulations that wereeffective January 2010 and which limited the total pounds of virgin HCFC refrigerants that can be produced and imported to levels which, based upon theEPA’s estimates, would require as much as 20% of the service demand for existing equipment to be met by reclaimed or recycled HCFC refrigerants. As aresult of certain litigation, the December 2009 regulations have been vacated, and in January 2012, the EPA issued a proposed rule to address allocations forthe 2012, 2013 and 2014 years. See “Recent Developments.” 3Source: HUDSON TECHNOLOGIES INC /NY, 10-K, March 05, 2013Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Products and Services From its inception, the Company has sold refrigerants, and has provided refrigerant reclamation and management services that are designed to recover andreuse refrigerants, thereby protecting the environment from release to the atmosphere and the corresponding ozone depletion. The reclamation process allows therefrigerant to be re-used thereby eliminating the need to destroy or manufacture additional refrigerant and eliminating the corresponding impact to theenvironment associated with the destruction and manufacturing. The Company believes it is the largest refrigerant reclaimer in the United States. Additionally,the Company has created alternative solutions to reactive and preventative maintenance procedures that are performed on commercial and industrialrefrigeration systems. These services, known as RefrigerantSide® Services, complement the Company’s refrigerant sales and refrigerant reclamation andmanagement services. The Company has also developed Performance Optimization services that identify inefficiencies in the operation of air conditioning andrefrigeration systems and assists companies to improve the efficiency of their systems and save energy. In addition, the Company is pursuing potentialopportunities for the creation and monetization of verified emission reductions. See “Carbon Offset Projects”. Refrigerant Sales The Company sells reclaimed and virgin (new) refrigerants to a variety of customers in various segments of the air conditioning and refrigeration industry.The Company continues to sell reclaimed CFC based refrigerants, which are no longer manufactured. Virgin, non-CFC refrigerants, including HCFC andHFC refrigerants, are purchased by the Company from several suppliers and resold by the Company, typically at wholesale. Additionally, the Companyregularly purchases used or contaminated refrigerants, some of which are CFC based, from many different sources, which refrigerants are then reclaimedusing the Company's high speed proprietary reclamation equipment, its patented Zugibeast® system, and then are resold by the Company. Refrigerant Management Services The Company provides a complete offering of refrigerant management services, which primarily include reclamation of refrigerants, laboratory testing throughthe Company’s laboratory, which has been certified by the Air Conditioning, Heating and Refrigeration Institute (“AHRI”), formerly the Air Conditioning, andRefrigeration Institute, and banking (storage) services tailored to individual customer requirements. Hudson also separates “crossed” (i.e. commingled)refrigerants and provides re-usable cylinder refurbishment and hydrostatic testing services. RefrigerantSide® Services The Company provides decontamination and recovery services that are performed at a customer's site through the use of portable, high volume, high-speedproprietary equipment, including the patented Zugibeast® system. Certain of these RefrigerantSide® Services, which encompass system decontamination,and refrigerant recovery and reclamation are also proprietary and are covered by process patents. In addition to the decontamination and recovery services previously described, the Company also provides predictive and diagnostic services for itscustomers. The Company offers diagnostic services that are intended to predict potential problems in air conditioning and refrigeration systems before theyoccur. The Company’s Chiller Chemistry® offering integrates several fluid tests of an operating system and the corresponding laboratory results into anengineering report providing its customers with an understanding of the current condition of the fluids, the cause for any abnormal findings and the potentialconsequences if the abnormal findings are not remediated. Fluid Chemistry®, an abbreviated version of the Company’s Chiller Chemistry® offering, isdesigned to quickly identify systems that require further examination. The Company also delivers energy services offerings (“Energy Services”) to large industrial and commercial companies both in the United States andinternationally. A large portion of its Energy Services business involves the performance of “investment grade” Energy Savings Assessments (“ESAs”) forprocess and utility systems including steam, refrigeration and process cooling, process heating, waste heat recovery, and combined heat and power systems.These assessments can identify significant energy and cost savings projects for customers that lead to a direct reduction in carbon dioxide (“CO2”) emissionsfrom the site or from the power plants. The Company’s Energy Services division is staffed by engineers that are recognized as Energy Experts and QualifiedBest Practices Specialists by the United States Department of Energy (“DOE”) in the areas of Steam and Process Heating under the DOE “Best Practices”program, and are the Lead International Energy Experts for steam systems for the United Nations Industrial Development Organization. The Company’s staffhave trained more than 2,000 industrial plant personnel in the US and internationally, and have developed and are currently delivering training curriculums in10 different countries. 4Source: HUDSON TECHNOLOGIES INC /NY, 10-K, March 05, 2013Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. The Company has also been awarded several US patents for its Performance Monitoring & Optimization System (“PMOS”), which is a system formeasuring, modifying and improving the efficiency of energy systems, including air conditioning and refrigeration systems, in industrial and commercialapplications. The Company’s PMOS is able to identify specific inefficiencies in the operation of refrigeration systems and, when used with Hudson’sRefrigerantSide® Services, can increase the efficiency of the operating systems thereby reducing energy usage and costs. Improving the system efficiencyreduces power consumption thereby directly reducing CO2 emissions at the power plants or onsite. In addition, the Company’s ChillSmart® offering, whichcombines the PMOS methodology with the Company’s Chiller Chemistry® offering, provides a snapshot of a packaged chiller’s operating efficiency andhealth. ChillSmart® provides a very effective predictive maintenance tool and helps our customers to identify the operating chillers that cause higher operatingcosts. Recently, the Company acquired proprietary EffTrack™ chiller efficiency software to complement the Company’s ChillSmart® offering and to enablecustomers to monitor and improve chiller performance and proactively identify and correct system inefficiencies. Carbon Offset Projects CFC refrigerants are ozone depleting substances and are also highly weighted greenhouse gases that contribute to global warming and climate change. Thedestruction of CFC refrigerants may be eligible for verified emission reductions that can be converted and monetized into carbon offset credits that may betraded in the emerging carbon offset markets. The Company is pursuing opportunities to acquire CFC refrigerants and is developing relationships within theemerging environmental markets in order to develop opportunities for the creation and monetization of verified emission reductions from the destruction ofCFC refrigerants. Hudson's Network Hudson operates from a network of facilities located in: Auburn, Washington—RefrigerantSide® Service depotBaton Rouge, Louisiana—RefrigerantSide® Service depotChampaign, Illinois—Reclamation and separation of refrigerants and cylinder refurbishment center; RefrigerantSide® Service depotCharlotte, North Carolina—RefrigerantSide® Service depotStony Point, New York—RefrigerantSide® Service depotPearl River, New York—Company headquarters and administrative officesPottsboro, Texas—Telemarketing officeHampstead, New Hampshire—Telemarketing officeTulsa, Oklahoma—Energy and Carbon Services Strategic Alliances The Company believes that the international market for refrigerant reclamation, sales and services is equal in size to the United States market for those salesand services. Over time, the Company expects to introduce its technology and offerings to several geographies around the world. In July 2011, the Company entered into a joint venture agreement with Safety Hi-Tech S.r.l (“SHT”) and with the principals of Banini-Binotti Associates(“BB”). The joint venture created a new entity known as Hudson Technologies Europe, S.r.l. (“HTE”). The Company and SHT each own 40% of HTE withBB owning the remaining 20%. HTE’s purpose is to develop a business that provides for refrigerant reclamation, RefrigerantSide® services and energyoptimization services throughout most of Europe, the Middle East and North Africa. As of December 31, 2012, the joint venture has begun limited operations.The Company intends to, over time, have each of its offerings that are available in the US made available in each of these geographies through the operationsof HTE. In August 2012, the Company entered into a joint venture agreement with SHT. The joint venture has created a new entity known as Safety Hi-Tech USA,LLC (“USA”). The Company and SHT each own 50% of USA. USA’s purpose is to develop a business that provides fire suppression and suppressantsthroughout North America and Mexico. As of December 31, 2012, the joint venture has not started operations. 5Source: HUDSON TECHNOLOGIES INC /NY, 10-K, March 05, 2013Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Suppliers The Company's financial performance and its ability to sell refrigerants is in part dependent on its ability to obtain sufficient quantities of virgin, non-CFCbased refrigerants, and of reclaimable CFC and non-CFC based, refrigerants from manufacturers, wholesalers, distributors, bulk gas brokers and from othersources within the air conditioning, refrigeration and automotive aftermarket industries, and on corresponding demand for refrigerants. The Company'srefrigerant sales include CFC based refrigerants, which are no longer manufactured. Additionally, the Company's refrigerant sales include non-CFC basedrefrigerants, including HCFC and HFC refrigerants, which are the most widely used refrigerants. Effective January 1, 1996, the Act limited the production ofvirgin HCFC refrigerants, which production was further limited in January 2004. Federal regulations enacted in January 2004 established production andconsumption allowances for HCFCs and imposed limitations on the importation of certain virgin HCFC refrigerants. In addition, effective January 2010, theAct further limited the production of virgin HCFC refrigerants and additional federal regulations were enacted which imposed further limitations on the use,production and importation of virgin HCFC refrigerants. As a result of certain litigation, the federal regulations implementing the January 2010 phase downschedule were vacated and the EPA has issued a proposed rule for future reductions. See “Recent Developments”. Under the Act, production of certain virginHCFC refrigerants is scheduled to be phased out by the year 2020 and production of all virgin HCFC refrigerants is scheduled to be phased out by the year2030. The limitations imposed by and under the Act may limit supplies of virgin refrigerants for the foreseeable future or cause a significant increase in theprice of virgin HCFC refrigerants. Customers The Company provides its services to commercial, industrial and governmental customers, as well as to refrigerant wholesalers, distributors, contractors andto refrigeration equipment manufacturers. Agreements with larger customers generally provide for standardized pricing for specified services. For the year ended December 31, 2012, two customers each accounted for 10% or more of the Company’s revenues and, in the aggregate these two customersaccounted for 28% of the Company’s revenue. At December 31, 2012, there were no outstanding receivables from these customers. For the year endingDecember 31, 2011, no one customer accounted for 10% or more of the Company’s revenues. Marketing Marketing programs are conducted through the efforts of the Company's executive officers, Company sales personnel, and third parties. Hudson employsvarious marketing methods, including direct mailings, technical bulletins, in-person solicitation, print advertising, response to quotation requests and theinternet through the Company’s website (www.hudsontech.com). Information in the Company's website is not part of this report. The Company's sales personnel are compensated on a combination of a base salary and commission. The Company's executive officers devote significant timeand effort to customer relationships. Competition The Company competes primarily on the basis of the performance of its proprietary high volume, high-speed equipment used in its operations, the breadth ofservices offered by the Company, including proprietary RefrigerantSide® Services and other on-site services, and price, particularly with respect to refrigerantsales. The Company competes with numerous regional and national companies that market reclaimed and virgin refrigerants and provide refrigerant reclamationservices. Certain of these competitors possess greater financial, marketing, distribution and other resources for the sale and distribution of refrigerants than theCompany and, in some instances, serve a more extensive geographic area than the Company. Hudson's RefrigerantSide® Services provide new and innovative solutions to certain problems within the refrigeration industry and, as such, the demand andmarket acceptance for these services are subject to uncertainty. Competition for these services primarily consists of traditional methods of solving theindustry's problems. The Company’s marketing strategy is to educate the marketplace that its alternative solutions are available and that RefrigerantSide®Services are superior to traditional methods. The market acceptance for these services is subject to uncertainty. 6Source: HUDSON TECHNOLOGIES INC /NY, 10-K, March 05, 2013Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Insurance The Company carries insurance coverage that it considers sufficient to protect the Company's assets and operations. The Company currently maintainsgeneral commercial liability insurance and excess liability coverage for claims up to $11,000,000 per occurrence and $12,000,000 in the aggregate. TheCompany attempts to operate in a professional and prudent manner and to reduce potential liability risks through specific risk management efforts, includingongoing employee training. The refrigerant industry involves potentially significant risks of statutory and common law liability for environmental damage and personal injury. TheCompany, and in certain instances, its officers, directors and employees, may be subject to claims arising from the Company's on-site or off-site services,including the improper release, spillage, misuse or mishandling of refrigerants classified as hazardous or non-hazardous substances or materials. TheCompany may be held strictly liable for damages, which could be substantial, regardless of whether it exercised due care and complied with all relevant lawsand regulations. Hudson maintains environmental impairment insurance of $10,000,000 per occurrence, and $10,000,000 annual aggregate, for events occurring subsequent toNovember 1996. Government Regulation The business of refrigerant sales, reclamation and management is subject to extensive, stringent and frequently changing federal, state and local laws andsubstantial regulation under these laws by governmental agencies, including the EPA, the United States Occupational Safety and Health Administration(“OSHA”) and the United States Department of Transportation (“DOT”). Among other things, these regulatory authorities impose requirements which regulate the handling, packaging, labeling, transportation and disposal ofhazardous and non-hazardous materials and the health and safety of workers, and require the Company and, in certain instances, its employees, to obtainand maintain licenses in connection with its operations. This extensive regulatory framework imposes significant compliance burdens and risks on theCompany. Hudson and its customers are subject to the requirements of the Act, and the regulations promulgated thereunder by the EPA, which make it unlawful for anyperson in the course of maintaining, servicing, repairing, and disposing of air conditioning or refrigeration equipment, to knowingly vent or otherwise releaseor dispose of ozone depleting substances, and non-ozone depleting substitutes, used as refrigerants. Pursuant to the Act, reclaimed refrigerant must satisfy the same purity standards as newly manufactured, virgin refrigerants in accordance with standardsestablished by AHRI prior to resale to a person other than the owner of the equipment from which it was recovered. The EPA administers a certificationprogram pursuant to which applicants certify to reclaim refrigerants in compliance with AHRI standards. The Company is one of only three certifiedrefrigerant testing laboratories under AHRI’s laboratory certification program, which is a voluntary program that certifies the ability of a laboratory to testrefrigerant in accordance with the AHRI 700 standard. In addition, the EPA has established a mandatory certification program for air conditioning and refrigeration technicians. Hudson's technicians have appliedfor or obtained such certification. The Company may also be subject to regulations adopted by the EPA which impose certain reporting requirements arising out of the importation of certainHCFCs, and arising out of the purchase, production, use and/or emissions of certain greenhouse gases, including HFCs. The Company is also subject to regulations adopted by the DOT which classify most refrigerants handled by the Company as hazardous materials orsubstances and imposes requirements for handling, packaging, labeling and transporting refrigerants and which regulate the use and operation of theCompany’s commercial motor vehicles used in the Company’s business. The Resource Conservation and Recovery Act of 1976, as amended ("RCRA"), requires facilities that treat, store or dispose of hazardous wastes to complywith certain operating standards. Before transportation and disposal of hazardous wastes off-site, generators of such waste must package and label theirshipments consistent with detailed regulations and prepare a manifest identifying the material and stating its destination. The transporter must deliver thehazardous waste in accordance with the manifest to a facility with an appropriate RCRA permit. Under RCRA, impurities removed from refrigerantsconsisting of oils mixed with water and other contaminants are not presumed to be hazardous waste. 7Source: HUDSON TECHNOLOGIES INC /NY, 10-K, March 05, 2013Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. The Emergency Planning and Community Right-to-Know Act of 1986, as amended requires the annual reporting by the Company of Emergency andHazardous Chemical Inventories (Tier II reports) to the various states in which the Company operates and requires the Company to file annual Toxic ChemicalRelease Inventory Forms with the EPA. The Comprehensive Environmental Response, Compensation and Liability Act of 1980 (“CERCLA”), establishes liability for clean-up costs andenvironmental damages to current and former facility owners and operators, as well as persons who transport or arrange for transportation of hazardoussubstances. Almost all states have similar statutes regulating the handling and storage of hazardous substances, hazardous wastes and non-hazardous wastes.Many such statutes impose requirements that are more stringent than their federal counterparts. The Company could be subject to substantial liability underthese statutes to private parties and government entities, in some instances without any fault, for fines, remediation costs and environmental damage, as aresult of the mishandling, release, or existence of any hazardous substances at any of its facilities. The Occupational Safety and Health Act of 1970, as amended mandates requirements for a safe work place for employees and special procedures andmeasures for the handling of certain hazardous and toxic substances. State laws, in certain circumstances, mandate additional measures for facilities handlingspecified materials. The Company believes that it is in compliance with all material regulations relating to its material business operations. Quality Assurance & Environmental Compliance The Company utilizes in-house quality and regulatory compliance control procedures. Hudson maintains its own analytical testing laboratory, which is AHRIcertified, to assure that reclaimed refrigerants comply with AHRI purity standards and employs portable testing equipment when performing on-site services toverify certain quality specifications. The Company employs five persons engaged full-time in quality control and to monitor the Company's operations forregulatory compliance. Employees The Company has 92 full and 2 part time employees including air conditioning and refrigeration technicians, chemists, engineers, sales and administrativepersonnel. None of the Company's employees are represented by a union. The Company believes that its employee relations are good. Patents and Proprietary Information The Company holds a United States patent and seventeen foreign patents and has patent applications pending in two other foreign countries, all relating to thehigh-speed equipment, components and process to reclaim refrigerants. The Company also holds a registered trademark for its Zugibeast®. The United Statespatent will expire in May 2014 and the foreign patents will expire between May 2014 and December 2014. The Company also holds several U.S. and foreignpatents related to certain RefrigerantSide® Services and supporting systems developed by the Company for certain systems and processes for measuring andimproving the efficiency of refrigeration systems, and for certain refrigerant recycling and reclamation technologies. These patents will expire between February2017 and April 2032. The Company believes that patent protection is important to its business. There can be no assurance as to the breadth or degree of protection that patents mayafford the Company, that any patent applications will result in issued patents or that patents will not be circumvented or invalidated. Technologicaldevelopment in the refrigerant industry may result in extensive patent filings and a rapid rate of issuance of new patents. Although the Company believes thatits existing patents and the Company's equipment do not and will not infringe upon existing patents or violate proprietary rights of others, it is possible that theCompany's existing patent rights may not be valid or that infringement of existing or future patents or violations of proprietary rights of others may occur. Inthe event the Company's equipment or processes infringe, or are alleged to infringe, patents or other proprietary rights of others, the Company may be requiredto modify the design of its equipment or processes, obtain a license or defend a possible patent infringement action. There can be no assurance that theCompany will have the financial or other resources necessary to enforce or defend a patent infringement or proprietary rights violation action or that theCompany will not become liable for damages. The Company also relies on trade secrets and proprietary know-how, and employs various methods to protect its technology. However, such methods may notafford complete protection and there can be no assurance that others will not independently develop such know-how or obtain access to the Company's know-how, concepts, ideas and documentation. Failure to protect its trade secrets could have a material adverse effect on the Company. 8Source: HUDSON TECHNOLOGIES INC /NY, 10-K, March 05, 2013Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Recent Developments In January 2012, the EPA published a proposed rule by which the EPA has proposed to further reduce the production of HCFC refrigerants when compared tothe reductions established in the January 1, 2010 published rule. The reductions proposed by the EPA in the proposed rule range from 11 to 47 percent fromthe levels established in the prior rule for the calendar years 2012, 2013, and 2014 (the “Period”). To the extent that there is no final rule for the Period, theindustry is operating under the direction of “No Action Assurance Letters” issued by the Enforcement Division of the EPA. For the years ending December 31,2012 and 2013, the EPA has allowed virgin production or importation of 55 and 39 million pounds, respectively, of HCFC 22. The Company believes it islikely that the final rule, which the Company expects to be issued in 2013, will allow for the production or importation of at least 45 million pounds of HCFC22 for 2013. Once a final rule is released, the actual number of pounds will be known for the entire Period. Item 1A. Risk Factors There are many important factors, including those discussed below (and above as described under “Patents and Proprietary Information”), that have affected,and in the future could affect Hudson’s business including, but not limited to, the factors discussed below, which should be reviewed carefully together withthe other information contained in this report. Some of the factors are beyond Hudson’s control and future trends are difficult to predict. Our existing and future debt obligations could impair our liquidity and financial condition. Our existing credit facility, which currently expires in June 2015, is secured by substantially all of our assets and contains formulas that limit the amount ofour borrowings under the facility. Moreover, the terms of our credit facility also include negative covenants that, among other things, may limit our ability toincur additional indebtedness. If we violate any loan covenants and do not obtain a waiver from our lender, our indebtedness under the credit facility wouldbecome immediately due and payable, and the lender could foreclose on its security, which could materially adversely affect our business and future financialcondition and could require us to curtail or otherwise cease our existing operations. We may need additional financing to satisfy our future capital requirements, which may not be readily available to us. Our capital requirements may be significant in the future. In the future, we may incur additional expenses in the development and implementation of ouroperations. Due to fluctuations in the price, demand and availability of new refrigerants, our existing credit facility that expires in June 2015 may not in thefuture be sufficient to provide all of the capital that we need to acquire and manage our inventories of new refrigerant. As a result, we may be required to seekadditional equity or debt financing in order to develop our RefrigerantSide® Services business our refrigerant sales business and our other businesses. Wehave no current arrangements with respect to, or sources of, additional financing other than our existing credit facility. There can be no assurance that we willbe able to obtain any additional financing on terms acceptable to us or at all. Our inability to obtain financing, if and when needed, could materially adverselyaffect our business and future financial condition and could require us to curtail or otherwise cease our existing operations. Adverse weather or economic downturn could adversely impact our financial results Our business could be negatively impacted by adverse weather or economic downturns. Weather is a significant factor in determining market demand for therefrigerants sold by us, and to a lesser extent, our RefrigerantSide® Services. Unusually cooler temperatures in the spring and summer tend to depressdemand for, and price of, refrigerants we sell. Protracted periods of cooler than normal spring and summer weather could result in a substantial reduction inour sales which could adversely affect our financial position as well as our results of operations. An economic downturn could cause customers to postpone orcancel purchases of the Company’s products or services. Either or both of these conditions could have severe negative implications to our business that mayexacerbate many of the risk factors we identified in this report but not limited, to the following: LiquidityThese conditions could reduce our liquidity and this could have a negative impact on our financial condition and results of operations. DemandThese conditions could lower the demand and/or price for our product and services, which would have a negative impact on our results of operation. The nature of our business exposes us to potential liability. The refrigerant recovery and reclamation industry involves potentially significant risks of statutory and common law liability for environmental damage andpersonal injury. We, and in certain instances, our officers, directors and employees, may be subject to claims arising from our on-site or off-site services,including the improper release, spillage, misuse or mishandling of refrigerants classified as hazardous or non-hazardous substances or materials. We may bestrictly liable for damages, which could be substantial, regardless of whether we exercised due care and complied with all relevant laws and regulations. Ourcurrent insurance coverage may not be sufficient to cover potential claims, and adequate levels of insurance coverage may not be available in the future at areasonable cost. A partially or completely uninsured claim against us, if successful and of sufficient magnitude would have a material adverse effect on ourbusiness and financial condition. 9Source: HUDSON TECHNOLOGIES INC /NY, 10-K, March 05, 2013Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Our business and financial condition is substantially dependent on the sale and continued environmental regulation of refrigerants. Our business and prospects are largely dependent upon continued regulation of the use and disposition of refrigerants. Changes in government regulationsrelating to the emission of refrigerants into the atmosphere could have a material adverse effect on us. Failure by government authorities to otherwise continue toenforce existing regulations or significant relaxation of regulatory requirements could also adversely affect demand for our services and products. Our business is subject to significant regulatory compliance burdens. The refrigerant reclamation and management business is subject to extensive, stringent and frequently changing federal, state and local laws and substantialregulation under these laws by governmental agencies, including the EPA, the OSHA and DOT. Although we believe that we are in substantial compliance withall material regulations relating to our material business operations, amendments to existing statutes and regulations or adoption of new statutes and regulationswhich affect the marketing and sale of refrigerant could require us to continually alter our methods of operation and/or discontinue the sale of certain of ourproducts resulting in costs to us that could be substantial. We may not be able, for financial or other reasons, to comply with applicable laws, regulations andpermit requirements, particularly as we seek to enter into new geographic markets. Our failure to comply with applicable laws, rules or regulations or permitrequirements could subject us to civil remedies, including substantial fines, penalties and injunctions, as well as possible criminal sanctions, which would, ifof significant magnitude, materially adversely impact our operations and future financial condition. As a result of competition, and the strength of some of our competitors in the market, we may not be able to compete effectively. The markets for our services and products are highly competitive. We compete with numerous regional and national companies which provide refrigerantrecovery and reclamation services, as well as companies which market and deal in new and reclaimed alternative refrigerants, including certain of oursuppliers, some of which possess greater financial, marketing, distribution and other resources than us. We also compete with numerous manufacturers ofrefrigerant recovery and reclamation equipment. Certain of these competitors have established reputations for success in the service of air conditioning andrefrigeration systems. We may not be able to compete successfully, particularly as we seek to enter into new markets. A number of factors could negatively impact the price and/or availability of refrigerants, which would, in turn, adversely affect our business andfinancial condition. Refrigerant sales continue to represent a significant portion of our revenues. Therefore, our business is substantially dependent on the availability of both newand used refrigerants in large quantities, which may be affected by several factors including, without limitations; (i) commercial production and consumptionlimitations imposed by the Act and legislative limitations and ban on HCFC refrigerants; (ii) the ban on production of CFC based refrigerants under the Act;(iii) the proposed legislation which, if enacted, could impose limitations on production and consumption of HFC refrigerants; (iv) introduction of newrefrigerants and air conditioning and refrigeration equipment; (v) price competition resulting from additional market entrants; (vi) changes in governmentregulation on the use and production of refrigerants; and (vii) reduction in demand for refrigerants. We do not maintain firm agreements with any of oursuppliers of refrigerants and we do not hold allowances permitting us to purchase and import HCFC refrigerants abroad. Sufficient amounts of new and/orused refrigerants may not be available to us in the future, particularly as a result of the further phase down of HCFC production, or may not be available oncommercially reasonable terms. Additionally, we may be subject to price fluctuations, periodic delays or shortages of new and/or used refrigerants. Our failureto obtain and resell sufficient quantities of virgin refrigerants on commercially reasonable terms, or at all, or to obtain, reclaim and resell sufficient quantitiesof used refrigerants would have a material adverse effect on our operating margins and results of operations. Issues relating to potential global warming and climate change could have an impact on our business. Refrigerants are considered to be strong greenhouse gases that are believed to contribute to global warming and climate change and are now subject to variousstate and federal regulations relating to the sale, use and emissions of refrigerants. In addition, federal legislation has been proposed that, if enacted, wouldimpose limitations on the production and importation of certain virgin HFC refrigerants and current and future global warming and climate change or relatedlegislation and/or regulations, may impose additional compliance burdens on us and on our customers and suppliers which could potentially result in increaseadministrative costs, decreased demand in the marketplace for our products, and/or increased costs for our supplies and products. 10Source: HUDSON TECHNOLOGIES INC /NY, 10-K, March 05, 2013Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. The loss of key management personnel would adversely impact our business. Our success is largely dependent upon the efforts of our Chief Executive Officer and Chairman. The loss of his services would have a material adverse effecton our business and prospects. We have the ability to designate and issue preferred stock, which may have rights, preferences and privileges greater than Hudson’s common stockand which could impede a subsequent change in control of us. Our Certificate of Incorporation authorizes our Board of Directors to issue up to 5,000,000 shares of “blank check” preferred stock and to fix the rights,preferences, privileges and restrictions, including voting rights, of these shares, without further shareholder approval. The rights of the holders of ourcommon stock will be subject to, and may be adversely affected by, the rights of holders of any additional preferred stock that may be issued by us in thefuture. Our ability to issue preferred stock without shareholder approval could have the effect of making it more difficult for a third party to acquire a majorityof our voting stock, thereby delaying, deferring or preventing a change in control of us. If our common stock were delisted from NASDAQ it would be subject to “penny stock” rules which could negatively impact its liquidity and ourshareholders’ ability to sell their shares. Our common stock is currently listed on the NASDAQ Capital Market. We must comply with numerous NASDAQ MarketPlace rules in order to continuethe listing of our common stock on NASDAQ. There can be no assurance that we can continue to meet the rules required to maintain the NASDAQ listing ofour common stock. If we are unable to maintain our listing on NASDAQ, the market liquidity of our common stock may be severely limited. Our management effectively controls our affairs. Currently, our officers and directors collectively own approximately 28% of our outstanding common stock. Accordingly, our officers and directors are in aposition to significantly effect, and potentially fully control us and the election of our directors. There is no provision for cumulative voting for our directors. We may fail to successfully integrate any acquisitions made by us into our operations. As part of our business strategy, we may look for opportunities to grow by acquiring other product lines, technologies or facilities that complement or expandour existing business. We may be unable to identify suitable acquisition candidates or negotiate acceptable terms. In addition, we may not be able tosuccessfully integrate any assets, liabilities, customers, systems or management personnel we may acquire into our operations and we may not be able torealize related revenue synergies and cost savings within expected time frames. There can be no assurance that we will be able to successfully integrate anyacquisition we do make. Item 1B. Unresolved Staff Comments Not Applicable Item 2. Properties The Company's Auburn, Washington depot facility is a 3,000 square foot facility located in a multi-tenant building leased from an unaffiliated third party atan annual rental of $25,000 pursuant to a month to month rental agreement. The Company's Baton Rouge, Louisiana depot facility is a 3,600 square foot facility located in a multi-tenant building leased from an unaffiliated third partyat an annual rental of $27,000 pursuant to a month to month rental agreement. The Company's Champaign, Illinois facility is located in a 48,000 square foot building, which was purchased by the Company in May 2005 for $999,999.On June 1, 2012, the Company entered into a mortgage note with Busey Bank for $855,000. The note bears interest at the fixed rate of 4% per annum,amortizing over 60 months and maturing on June 1, 2017. The mortgage note is secured by the Company’s land and building located in Champaign, Illinois.As of December 31, 2012, the Company has $764,000 outstanding under this mortgage and the annual real estate taxes on this facility are approximately$42,000. The Company has established a second facility in Champaign, Illinois, which is a 60,000 square foot facility located in an approximately 130,000 square footbuilding. The building is leased from an unaffiliated third party at an annual rental of $258,000, pursuant to an arrangement expiring in December 2014. TheCompany also leases an additional 4,000 square feet in the same building at an annual rent of $19,200 pursuant to a month to month rental agreement. The Company's Charlotte, North Carolina depot facility is an 8,500 square foot facility located in a multi-tenant building leased from an unaffiliated thirdparty at an annual rental of $61,000 pursuant to an agreement expiring in March 2016. 11Source: HUDSON TECHNOLOGIES INC /NY, 10-K, March 05, 2013Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. The Company’s Stony Point, New York depot facility is an 18,000 square foot facility located in a multi-tenant building leased from an unaffiliated thirdparty at an annual rental of $106,000 pursuant to an agreement expiring in June 2016. The Company's headquarters are located in a 4,200 square foot office facility located in a multi-tenant building in Pearl River, New York. The building isleased from an unaffiliated third party at an annual rental of $105,000 pursuant to an agreement expiring in August 2018. The Company’s Pottsboro, Texas telemarketing facility is located in a 1,350 square foot office facility located in a multi-tenant building leased from anunaffiliated third party at an annual rental of $18,000 pursuant to an agreement expiring in August 2014. The Company's Hampstead, New Hampshire telemarketing facility is located in a 1,600 square foot office facility located in a multi-tenant building leasedfrom an unaffiliated third party at an annual rental of $24,000 pursuant to an agreement expiring in August 2017. The Company’s Tulsa, Oklahoma energy and carbon services facility is located in a 2,304 square foot office facility located in a multi-tenant building leasedfrom an unaffiliated third party at an annual rental of $26,000 which includes our share of operating expenses. This lease expires December 2014. In addition to the above leases, the Company from time to time utilizes public warehouse space on a month to month basis. The Company typically enters intoshort-term leases for its facilities and whenever possible extends the expiration date of such leases. The Company believes that its insurance policies areadequate to protect the Company’s property. Item 3. Legal Proceedings On April 1, 1999, the Company reported a release of approximately 7,800 lbs. of R-11 refrigerant (the “1999 Release”), at its former leased facility inHillburn, NY (the “Hillburn Facility”), which the Company vacated in June 2006. A failed hose connection to one of the Company's outdoor storage tanksallowed liquid R-11 refrigerant (“R-11”) to discharge from the tank into the concrete secondary containment area in which the subject tank was located. Between April 1999 and May 1999, with the approval of the New York State Department of Environmental Conservation (“DEC”), the Companyconstructed and put into operation a remediation system to remove R-11 levels in the groundwater under and around the Hillburn Facility. In September 2000, the Company signed an Order on Consent with the DEC, which was amended in May 2001, whereby the Company agreed to operate theremediation system and perform monthly testing at the Hillburn Facility until remaining groundwater contamination has been effectively abated. In July 2005,the DEC approved a modification of the Order on Consent to reduce the frequency of testing from monthly to quarterly. The Company is continuing to operatethe remediation system pursuant to the approved modifications to that Order on Consent. In December 2012, the Company met with representatives of theDEC and has proposed further modifications to the Order of Consent to further reduce the frequency and scope of testing, and expects to finalize thesemodifications during the first half of 2013. Based upon the Company’s recent discussions with the DEC, as of December 31, 2012, the Company accrued, asan expense in its consolidated financial statements, the costs that the Company believes it will incur in connection with its compliance with the Order ofConsent through December 31, 2017. There can be no assurance that additional testing will not be required or that the Company will not incur additional costsand such costs in excess of the Company’s estimate may have a material adverse effect on the Company financial condition or results of operations. In May 2000, the Hillburn Facility, as a result of the 1999 Release, was nominated by the EPA for listing on the National Priorities List (“NPL”) pursuant toCERCLA. The Company submitted opposition to the listing within the sixty-day comment period. In September 2003, the EPA advised the Company that ithas no current plans to finalize the process for listing of the Hillburn Facility on the NPL and that the EPA will not withdraw the proposal for listing on theNPL. The Company has exhausted all insurance proceeds available for the 1999 Release under all applicable policies. During the years ended December 31, 2012 and 2011, the Company incurred $102,000 and $86,000, respectively, in additional remediation costs inconnection with the matters above. There can be no assurance that the ultimate outcome of the 1999 Release will not have a material adverse effect on theCompany's financial condition and results of operations. There can be no assurance that the EPA will not change its current plans and seek to finalize theprocess of listing the Hillburn Facility on the NPL, or that the ultimate outcome of such a listing will not have a material adverse effect on the Company'sfinancial condition and results of operations. Item 4. Mine Safety Disclosures Not Applicable 12Source: HUDSON TECHNOLOGIES INC /NY, 10-K, March 05, 2013Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Part II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The Company's common stock trades on the NASDAQ Capital Market under the symbol “HDSN”. The following table sets forth, for the periods indicated,the range of the high and low sale prices for the Common stock as reported by NASDAQ. High Low 2011 · First Quarter $2.40 $1.60 · Second Quarter $2.25 $1.55 · Third Quarter $1.92 $1.10 · Fourth Quarter $1.57 $1.01 2012 · First Quarter $3.82 $1.38 · Second Quarter $4.23 $2.84 · Third Quarter $4.40 $3.23 · Fourth Quarter $4.06 $2.98 The number of record holders of the Company's common stock was approximately 170 as of February 26, 2013. The Company believes that there are inexcess of 2,400 beneficial owners of its common stock. To date, the Company has not declared or paid any cash dividends on its common stock. The payment of dividends, if any, in the future is within thediscretion of the Board of Directors and will depend upon the Company's earnings, its capital requirements and financial condition, borrowing covenants, andother relevant factors. The Company presently intends to retain all earnings, if any, to finance the Company's operations and development of its business anddoes not expect to declare or pay any cash dividends on its Common stock in the foreseeable future. In addition, the Company has a credit facility with PNCBank National Association (“PNC”) that, among other things, restricts the Company's ability to declare or pay any cash dividends on its capital stock. See Item 12 for certain information with respect to the Company's equity compensation plans as of December 31, 2012. On May 17, 2012, the Company issued 20,000 shares of the Company’s common stock to an individual business consultant for services rendered to theCompany, and the Company recognized $74,000 in general and administrative expenses for these services. On November 9, 2012, the Company issued 133,589 shares of the Company’s common stock, at a price of $3.743 per share, to EffTec International, Inc.(“EffTec”), in connection with the Company’s purchase from EffTec’s subsidiary of its proprietary Efftrack™ software and certain other assets. TheCompany also issued 26,716 shares of its common stock, at a price of $3.743 per share, to Scott Macon, Ltd. in payment for services it performed as theCompany’s advisor in such transaction. The issuances of the above-referenced shares were exempt from registration pursuant to the provisions of Section 4(2) of the Securities Act of 1933. Item 6. Selected Financial Data Not Applicable 13Source: HUDSON TECHNOLOGIES INC /NY, 10-K, March 05, 2013Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations Certain statements contained in this section and elsewhere in this Form 10-K constitutes “forward-looking statements” within the meaning of the PrivateSecurities Litigation Reform Act of 1995. Such forward-looking statements involve a number of known and unknown risks, uncertainties and other factorswhich may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance orachievements expressed or implied by such forward-looking statements. Such factors include, but are not limited to, changes in the demand and price forrefrigerants (including unfavorable market conditions adversely affecting the demand for, and the price of refrigerants), the Company's ability to source CFCand non-CFC based refrigerants, regulatory and economic factors, seasonality, competition, litigation, the nature of supplier or customer arrangements thatbecome available to the Company in the future, adverse weather conditions, possible technological obsolescence of existing products and services, possiblereduction in the carrying value of long-lived assets, estimates of the useful life of its assets, potential environmental liability, customer concentration, theability to obtain financing, and other risks detailed in this report and in the Company's other periodic reports filed with the Securities and ExchangeCommission (“SEC”). The words “believe”, “expect”, “anticipate”, “may”, “plan”, “should” 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. Critical Accounting Policies The Company's discussion and analysis of its financial condition and results of operations are based upon its consolidated financial statements, which havebeen prepared in accordance with accounting principles generally accepted in the United States. The preparation of these consolidated financial statementsrequires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure ofcontingent assets and liabilities. Several of the Company's accounting policies involve significant judgments, uncertainties and estimations. The Companybases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of whichform the basis for making judgments about the carrying values of assets and liabilities. Actual results may differ from these estimates under differentassumptions or conditions. To the extent that actual results differ from management's judgments and estimates, there could be a material adverse effect on theCompany. On a continuous basis, the Company evaluates its estimates, including, but not limited to, those estimates related to its allowance for doubtfulaccounts, inventory reserves, and valuation allowance for the deferred tax assets relating to its net operating loss carry forwards (“NOLs”) and commitmentsand contingencies. With respect to accounts receivable, the Company estimates the necessary allowance for doubtful accounts based on both historical andanticipated trends of payment history and the ability of the customer to fulfill its obligations. For inventory, the Company evaluates both current andanticipated sales prices of its products to determine if a write down of inventory to net realizable value is necessary. In determining the Company’s valuationallowance for its deferred tax assets, the Company assesses its ability to generate taxable income in the future. The Company utilizes both internal and externalsources to evaluate potential current and future liabilities for various commitments and contingencies. In the event that the assumptions or conditions change inthe future, the estimates could differ from the original estimates. Overview Sales of refrigerants continue to represent a significant portion of the Company’s revenues. The Company’s refrigerant sales are primarily HCFC and HFCbased refrigerants and to a lesser extent CFC based refrigerants that are no longer manufactured. Under the Act the phase-down of future production of certainvirgin HCFC refrigerants commenced in 2010 and is scheduled to be phased out by the year 2020, and production of all virgin HCFC refrigerants isscheduled to be phased out by the year 2030. The Company has created and developed a service offering known as RefrigerantSide® Services. RefrigerantSide® Services are sold to contractors and end-users whose refrigeration systems are used in commercial air conditioning and industrial processing. These services are offered in addition to refrigerant salesand the Company's traditional refrigerant management services, which consist primarily of reclamation of refrigerants. The Company has created a networkof service depots that provide a full range of the Company's RefrigerantSide® Services to facilitate the growth and development of its service offerings. The Company focuses its sales and marketing efforts for its RefrigerantSide® Services on customers who the Company believes most readily appreciate andunderstand the value that is provided by its RefrigerantSide® Services offering. In pursuing its sales and marketing strategy, the Company offers itsRefrigerantSide® Services to customers in the following industries: petrochemical, pharmaceutical, industrial power, manufacturing, commercial facility andproperty management and maritime. The Company may incur additional expenses as it develops its RefrigerantSide® Services offering. 14Source: HUDSON TECHNOLOGIES INC /NY, 10-K, March 05, 2013Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Results of Operations Year ended December 31, 2012 as compared to the year ended December 31, 2011 Revenues for the year ended December 31, 2012 were $56,447,000, an increase of $12,125,000 or 27% from the $44,322,000 reported during the comparable2011 period. The increase in revenues was primarily attributable to an increase in refrigerant revenues of $11,874,000 as well as an increase inRefrigerantSide® Services revenues of $251,000. The increase in refrigerant revenue is primarily related to an increase in the selling price per pound of certainrefrigerants sold, which accounted for an increase in revenues of $18,862,000, offset in part by a decrease in the number of pounds of certain refrigerantssold, which accounted for a decrease in revenues of $6,988,000. The increase in RefrigerantSide® Services was primarily attributable to an increase in theprice of jobs completed when compared to the same period in 2011, offset to a lesser extent by a decrease in the number of jobs completed compared to thesame period in 2011. Cost of sales for the year ended December 31, 2012 was $33,905,000, a decrease of $1,732,000 or 5% from the $35,637,000 reported during the comparable2011 period. The decrease in cost of sales was primarily due to fewer pounds of refrigerant sold in 2012 when compared to the same period in 2011. As apercentage of sales, cost of sales was 60% of revenues for 2012, a decrease from the 80% reported for the comparable 2011 period, primarily due to a higherselling price per pound for certain refrigerants in 2012 as compared to the comparable 2011 period. Operating expenses for the year ended December 31, 2012 were $7,662,000, an increase of $1,505,000 or 24% from the $6,157,000 reported during thecomparable 2011 period. The increase in operating expenses was primarily related to increases in selling expense of $600,000 (primarily in selling payrollexpenses), administrative payroll expenses of $600,000, and the balance primarily related to increased professional fees. Other income (expense) for the year ended December 31, 2012 was ($684,000), compared to the ($860,000) reported during the comparable 2011 period. Otherincome (expense) includes interest expense of $693,000 and $881,000 for the comparable 2012 and 2011 periods, respectively. The decrease in interestexpense is due to a reduction in the effective interest rate in 2012 when compared to 2011. Income tax provision for the year ended December 31, 2012 and 2011 was $1,395,000 and $634,000, respectively. For 2012 the income tax provision of$1,395,000 was for federal and state income tax at statutory rates or $5,395,000 offset by the release of $4,000,000 of the Company’s deferred tax assetvaluation allowance. As of December 31, 2012 there is no further deferred tax asset valuation allowance. Net income for the year ended December 31, 2012 was $12,801,000, an increase of $11,767,000 from the $1,034,000 net income reported during thecomparable 2011 period, primarily due to increased revenues and gross profit, partially offset by increased operating expenses and income tax expenses. Liquidity and Capital Resources At December 31, 2012, the Company had working capital, which represents current assets less current liabilities, of $27,408,000, an increase of$14,943,000 from the working capital of $12,465,000 at December 31, 2011. The increase in working capital is primarily attributable to net income for theperiod and the replacement of the Company’s prior credit facility with a new credit facility with PNC (the “PNC Facility”), as well as the refinancing of themortgage on the Champaign, Illinois facility, resulting in $5 million of long-term debt. Inventory and trade receivables are principal components of current assets. At December 31, 2012, the Company had inventories of $40,167,000, an increaseof $22,433,000 from $17,734,000 at December 31, 2011. The increase in the inventory balance is due to the increased cost of HCFC refrigerants, which arecurrently being phased down by the EPA, as well as the timing and availability of inventory purchases and the sale of refrigerants. The Company's ability tosell 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 thenature of supplier or customer arrangements and the Company's ability to source CFC based refrigerants (which are no longer being produced), HCFCrefrigerants (which are currently being phased down leading to a full phase out of virgin production), or non-CFC based refrigerants. At December 31, 2012,the Company had trade receivables, net of allowance for doubtful accounts, of $1,956,000, a decrease of $497,000 from $2,453,000 at December 31, 2011.The Company's trade receivables are concentrated with various wholesalers, brokers, contractors and end-users within the refrigeration industry that areprimarily located in the continental United States. The Company has historically financed its working capital requirements through cash flows from operations, the issuance of debt and equity securities, andbank borrowings. 15Source: HUDSON TECHNOLOGIES INC /NY, 10-K, March 05, 2013Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Net cash used by operating activities for the year ended December 31, 2012, was $9,266,000 compared with net cash provided by operating activities of$613,000 for the comparable 2011 period. Net cash used by operating activities for the 2012 period was primarily attributable to an increase in inventory,offset by net income. Net cash used by investing activities for the year ended December 31, 2012, was $1,997,000 compared with net cash used by investing activities of$946,000 for the comparable 2011 period. The net cash used by investing activities for the 2012 period was primarily related to investment in general purposeequipment for the Company’s Champaign, Illinois facility. Net cash provided by financing activities for the year period ended December 31, 2012, was $11,296,000 compared with net cash provided by financingactivities of $365,000 for the comparable 2011 period. The net cash provided by financing activities for the 2012 period was primarily due to an increase inshort term borrowing and, to a lesser extent, the issuance of long-term debt. At December 31, 2012, the Company had cash and cash equivalents of $3,991,000. The Company continues to assess its capital expenditure needs. TheCompany may, to the extent necessary, continue to utilize its cash balances to purchase equipment primarily for its operations. The Company estimates thatthe total capital expenditures for 2013 will be approximately $2,000,000. The following is a summary of the Company's significant contractual cash obligations for the periods indicated that existed as of December 31, 2012 (in000’s): Twelve Month Period Ended December 31, Long and short term debt and capital lease obligations: 2013 2014 2015 2016 2017 &Thereafter Total Principal $12,736 $290 $4,267 $257 $106 $17,656 Estimated interest (1) (2) 618 609 308 9 2 1,546 Operating leases 668 537 238 181 194 1,818 Total contractual cash obligations $14,022 $1,436 $4,813 $447 $302 $21,020 (1) The estimated interest payments on revolving debt are based on the interest rates in effect and the outstanding revolving debt obligation as of December 31,2012 through the expiration of the PNC Facility on June 22, 2015. (2) The estimated future interest payments on all debt other than revolving debt are based on the respective interest rates applied to the declining principalbalances on each of the notes. On June 22, 2012, a subsidiary of Hudson entered into the PNC Facility. Under the terms of the PNC Facility, Hudson could initially borrow up to$27,000,000 consisting of a term loan in the principal amount of $4,000,000 and revolving loans in a maximum amount up to the lesser of $23,000,000 and aborrowing base that is calculated based on the outstanding amount of Hudson’s eligible receivables and eligible inventory, as described in the PNC Facility.Amounts borrowed under the PNC Facility may be used by Hudson for working capital needs and to reimburse drawings under letters of credit. At December31, 2012, total borrowings under the PNC Facility were $16,451,000, and there was $10,357,000 available to borrow under the revolving line of credit. Theeffective interest rate under the PNC Facility was 4% at December 31, 2012. On February 15, 2013 the PNC Facility was amended. As a result of thisamendment, Hudson may borrow up to a maximum of $40,000,000 consisting of a term loan in the principal amount of $4,000,000 and revolving loans in amaximum amount up to $36,000,000. Interest on loans under the PNC Facility is payable in arrears on the first day of each month with respect to loans bearing interest at the domestic rate (as setforth in the PNC Facility) and at the end of each interest period with respect to loans bearing interest at the Eurodollar rate (as set forth in the PNC Facility) or,for Eurodollar rate loans with an interest period in excess of three months, at the earlier of (a) each three months from the commencement of such Eurodollarrate loan or (b) the end of the interest period. Interest charges with respect to loans are computed on the actual principal amount of loans outstanding during themonth at a rate per annum equal to (A) with respect to domestic rate loans, the sum of (i) a rate per annum equal to the higher of (1) the base commerciallending rate of PNC, (2) the federal funds open rate plus .5% and (3) the daily LIBOR plus 1%, plus (ii) .5% and (B) with respect to Eurodollar rate loans,the sum of the Eurodollar rate plus 2.25%. Hudson granted to PNC, for itself, and as agent for such other lenders as thereafter may become a lender under the PNC Facility, a security interest inHudson’s receivables, intellectual property, general intangibles, inventory and certain other assets. The PNC Facility contains certain financial and non-financial covenants relating to Hudson, including limitations on Hudson’s ability to pay dividends oncommon stock or preferred stock, and also includes certain events of default, including payment defaults, breaches of representations and warranties,covenant defaults, cross-defaults to other obligations, events of bankruptcy and insolvency, certain ERISA events, judgments in excess of specified amounts,impairments to guarantees and a change of control. The commitments under the PNC Facility will expire and the full outstanding principal amount of the loans, together with accrued and unpaid interest, are dueand payable in full on June 22, 2015, unless the commitments are terminated and the outstanding principal amount of the loans are accelerated soonerfollowing an event of default. Source: HUDSON TECHNOLOGIES INC /NY, 10-K, March 05, 2013Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.16Source: HUDSON TECHNOLOGIES INC /NY, 10-K, March 05, 2013Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. The PNC Facility contains a financial covenant to maintain at all times a Fixed Charge Coverage Ratio of not less than 1.10 to 1.00, tested quarterly on arolling twelve month basis. Fixed Charge Coverage Ratio is defined in the PNC Facility, with respect to any fiscal period, the ratio of (a) EBITDA of Hudsonfor such period, minus unfinanced capital expenditures (as defined in the PNC Facility) made by Hudson during such period, minus the aggregate amount ofcash taxes paid by Hudson during such period, minus the aggregate amount of dividends and distributions made by Hudson during such period, minus theaggregate amount of payments made with cash by Hudson to satisfy soil sampling and reclamation related to environmental clean up at the Company’s formerHillburn, NY facility during such period (to the extent not already included in the calculation of EBITDA as determined by the Agent) to (b) the aggregateamount of all principal payments due and/or made, except principal payments related to outstanding revolving advances with regard to all funded debt (asdefined in the PNC Facility) of Hudson during such period, plus the aggregate interest expense of Hudson during such period. EBITDA as defined in the PNCFacility shall mean for any period the sum of (i) earnings before interest and taxes for such period plus (ii) depreciation expenses for such period, plus (iii)amortization expenses for such period, plus (iv) non-cash charges. As of December 31, 2012, the Company was in compliance with all covenants in the PNCFacility. The Company believes that it is reasonably likely that in the foreseeable future, the Company will continue to be in compliance with all covenants inthe PNC Facility. On July 7, 2010, the Company sold 2,737,500 units, with the aggregate units consisting of 2,737,500 shares of the Company’s common stock and warrantsto purchase 1,368,750 shares, at a price of $2.00 per unit pursuant to the Company’s shelf registration and received net proceeds of approximately$4,900,000 (“2010 Offering”). The warrants issued as part of the 2010 Offering have an exercise price of $2.60 per share and were initially exercisable for afive-year period. Effective as of March 4, 2011, the Company repurchased warrants to purchase 150,000 shares of the Company’s common stock, at a priceof $0.60 per warrant. In March 2011 the expiration date of the remaining warrants was extended to July 7, 2016. The value of the aggregate number ofwarrants issued pursuant to the 2010 Offering was approximately $1,300,000 and such amount was charged as a component of stockholders’ equity toadditional paid in capital. In March 2012, warrants to purchase 50,000 shares of the Company’s common stock were exercised on a “net exercise” basis andthe Company issued 7,349 shares of common stock in exchange for the warrants surrendered.As a result of the repurchase, and the exercise of 50,000 warrants, there are 1,168,750 warrants outstanding. On June 1, 2012, the Company entered into a mortgage note with Busey Bank for $855,000. The note bears interest at the fixed rate of 4% per annum,amortizing over 60 months and maturing on June 1, 2017. The mortgage note is secured by the Company’s land and building located in Champaign, Illinois.As of December 31, 2012, the principal balance of this mortgage note was $764,000. The Company believes that it will be able to satisfy its working capital requirements for the foreseeable future from anticipated cash flows from operations andavailable funds under the PNC Facility. Any unanticipated expenses, including, but not limited to, an increase in the cost of refrigerants purchased by theCompany, an increase in operating expenses or failure to achieve expected revenues from the Company's RefrigerantSide® Services and/or refrigerant sales oradditional expansion or acquisition costs that may arise in the future would adversely affect the Company's future capital needs. There can be no assurancethat the Company's proposed or future plans will be successful, and as such, the Company may require additional capital sooner than anticipated, whichcapital may not be available. Inflation Inflation has not historically had a material impact on the Company's operations. Reliance on Suppliers and Customers The Company's financial performance and its ability to sell refrigerants is in part dependent on its ability to obtain sufficient quantities of virgin, non-CFCbased refrigerants, and of reclaimable CFC and non-CFC based refrigerants from manufacturers, wholesalers, distributors, bulk gas brokers and from othersources within the air conditioning, refrigeration and automotive aftermarket industries, and on corresponding demand for refrigerants. The Company'srefrigerant sales include CFC based refrigerants, which are no longer manufactured. Additionally, the Company's refrigerant sales include non-CFC basedrefrigerants, including HCFC and HFC refrigerants, which are the most widely used refrigerants. Effective January 1, 1996, the Act limits the production ofvirgin HCFC refrigerants, which production was further limited in January 2004. Federal regulations enacted in January 2004 established production andconsumption allowances for HCFCs and imposed limitations on the importation of certain virgin HCFC refrigerants. In addition, effective January 2010, theAct further limited the production of virgin HCFC refrigerants and additional federal regulations were enacted which imposed further limitations and a phasedown on the use, production and importation of certain virgin HCFC refrigerants. As a result of certain litigation, the federal regulations implementing theJanuary 2010 phase down schedule have been vacated and in July 2011 the EPA recast production and consumption allowances for the 2011 year. In January2012, the EPA published a proposed rule by which the EPA has proposed to further reduce the production of HCFC refrigerants when compared to thereductions established in the January 1, 2010 published rule. The reductions proposed by the EPA in the proposed rule range from 11 to 47 percent from thelevels established in the prior rule, for calendar years 2012, 2013, and 2014 (the “Period”). To the extent that there is no final rule for the Period, the industryis operating under the direction of “No Action Assurance Letters” issued by the Enforcement Division of the EPA. For the years ending December 31, 2012 and2013, the EPA has allowed virgin production or importation of 55 and 39 million pounds, respectively, of HCFC22. It is expected that for the 2013 year theEPA will allow for the production and importation of at least 45 million pounds. Once a final rule is released the actual production figures will be known forthe entire Period. The limitations imposed by and under the Act may limit supplies of virgin refrigerants for the foreseeable future or cause a significantincrease in the price of virgin HCFC refrigerants. 17Source: HUDSON TECHNOLOGIES INC /NY, 10-K, March 05, 2013Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. For the year ended December 31, 2012, two customers each accounted for 10% or more of the Company’s revenues and, in the aggregate these two customersaccounted for 28% of the Company’s revenues. At December 31, 2012, there were no outstanding receivables from these customers. For the year endedDecember 31, 2011, no one customer accounted for 10% or more of the Company’s revenues. The loss of a principal customer or a decline in the economic prospects of and/or a reduction in purchases of the Company's products or services by any suchcustomer could have a material adverse effect on the Company's financial position and results of operations. Seasonality and Weather Conditions 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 refrigerantand service sales, availability and price of refrigerant products (virgin or reclaimable), changes in reclamation technology and regulations, timing inintroduction and/or retrofit or replacement of CFC and non CFC based refrigeration equipment, the rate of expansion of the Company's operations, and byother factors. The Company's business is seasonal in nature with peak sales of refrigerants occurring in the first half of each year. During past years, theseasonal decrease in sales of refrigerants has resulted in losses particularly in the fourth quarter of the year. In addition, to the extent that there is unseasonablycool weather throughout the spring and summer months, which would adversely affect the demand for refrigerants, there would be a corresponding negativeimpact on the Company. Delays or inability in securing adequate supplies of refrigerants at peak demand periods, lack of refrigerant demand, increasedexpenses, declining refrigerant prices and a loss of a principal customer could result in significant losses. There can be no assurance that the foregoing factorswill not occur and result in a material adverse effect on the Company's financial position and significant losses. The Company believes that there is a similarseasonal element to RefrigerantSide® Service revenues as refrigerant sales. The Company is continuing to assess its RefrigerantSide® Service revenuesseasonal trend. Recent Accounting Pronouncements In July 2012, the FASB issued ASU 2012-02, Intangibles- Goodwill or Other (Topic 350): Testing Indefinite-Living Tangible Assets for Impairment.ASU 2012-02 simplifies the guidance for testing the decline in the realizable value (impairment) of indefinite-lived intangible assets other than goodwill byallowing an organization the option to first assess qualitative factors to determine whether it is necessary to perform the quantitative impairment test. Anorganization electing to perform a qualitative assessment is no longer required to calculate the fair value of an indefinite- lived intangible asset unless theorganization determines, based on a qualitative assessment, that it is “more likely than not” that the asset is impaired. The amendments in this Update areeffective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012. Early adoption is permitted. The adoption ofASU 2012-02 is not expected to have a material impact on our results of operations or our financial position. ASU 2012-04 contains amendments to clarify the ASC, correctunintended application of guidance, or make minor improvements to the ASC that are not expected to have a significant effect on current accounting practice orcreate a significant administrative cost to most entities. Additionally, the amendments are intended to make the ASC easier to understand and the fair valvemeasurement guidance easier to apply by eliminating inconsistencies and providing needed clarifications. The amendments that do not have transitionguidance were effective upon issuance. The amendments that are subject to the transition guidance will be effective for fiscal periods beginning after December15, 2012. The adoption of ASU 2012-04 is not expected to have a material impact on our results of operations or our financial position. Item 7A. Quantitative and Qualitative Disclosures about Market Risk Interest Rate SensitivityWe are exposed to market risk primarily from fluctuations in interest rates on the PNC Facility. The PNC Facility is a $40,000,000 secured facility. Interest onloans under the PNC Facility is payable in arrears on the first day of each month with respect to loans bearing interest at the domestic rate (as set forth in thePNC Facility) and at the end of each interest period with respect to loans bearing interest at the Eurodollar rate (as set forth in the PNC Facility) or, forEurodollar rate loans with an interest period in excess of three months, at the earlier of (a) each three months from the commencement of such Eurodollar rateloan or (b) the end if he interest period. Interest charges with respect to loans are computed on the actual principal amount of loans outstanding during themonth at a rate per annum equal to (A) with respect to domestic rate loans, the sum of (i) a rate per annum equal to the higher of (1) the base commerciallending rate of PNC, (2) the federal funds open rate plus .5% and (3) the daily LIBOR plus 1%, plus (ii) .5% and (B) with respect to Eurodollar rate loans,the sum of the Eurodollar rate plus 2.25%. The outstanding balance on the PNC Facility as of December 31, 2012 was $16,451,000. Future interest ratechanges on our borrowing under the PNC Facility, may have an impact on our consolidated results of operations. 18Source: HUDSON TECHNOLOGIES INC /NY, 10-K, March 05, 2013Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Item 8. Financial Statements and Supplementary Data The financial statements appear in a separate section of this report following Part IV. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure Not Applicable Item 9A. Controls and ProceduresDisclosure Controls and ProceduresThe Company, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and ChiefFinancial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures, as defined in Rule 13a-15(e) of the SecuritiesExchange Act of 1934, as amended (“Exchange Act”), as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officerand the Chief Financial Officer have concluded that the Company’s disclosure controls and procedures provide reasonable assurance that they are effective toensure that information required to be disclosed in reports filed under the Exchange Act is recorded, processed, summarized and reported within the timeperiods specified in the rules and forms of the Securities and Exchange Commission, and that such information is accumulated and communicated to theCompany’s management, including its principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding requireddisclosure. Because of the inherent limitations in all control systems, any controls and procedures, no matter how well designed and operated, can provideonly reasonable assurance of achieving the desired control objectives, and management necessarily is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Furthermore, the Company’s controls and procedures can be circumvented by the individual acts ofsome persons, by collusion of two or more people or by management override of the control and misstatements due to error or fraud may occur and not bedetected on a timely basis. Changes in Internal Control over Financial ReportingThere were no changes in the Company’s internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) in the quarter endedDecember 31, 2012 that materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting. Management’s Report on Internal Control over Financial ReportingManagement of the Company is responsible for establishing and maintaining adequate internal control over financial reporting for the Company as defined inRule 13a-15(f) under the Exchange Act. The Company’s internal control over financial reporting is designed to provide reasonable assurance to the Company’smanagement and board of directors regarding the preparation and fair presentation of published financial statements and the reliability of financial reporting. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determinedto be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. The Company’s Chief Executive Officer and Chief Financial Officer have assessed the effectiveness of the Company’s internal control over financial reportingas of December 31, 2012. In making this assessment, the Company’s Chief Executive Officer and Chief Financial Officer have used the criteria set forth bythe Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control – Integrated Framework. Based on ourassessment, we believe that, as of December 31, 2012, the Company’s internal control over financial reporting is effective based on those criteria. This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting.Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to rules of the SEC that permit the Companyto provide only management’s report in this annual report on Form 10-K. Item 9B. Other Information None 19Source: HUDSON TECHNOLOGIES INC /NY, 10-K, March 05, 2013Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Part III Item 10. Directors, Executive Officers and Corporate Governance The information presented below provides information each director has given us about his age, all positions he holds, his principal occupation and hisbusiness experience for at least the past five years. In addition to the information presented below regarding each nominee’s specific experience, qualifications,attributes and skills that led our Board to the conclusion that he should serve as a director, we also believe that all of our directors have a reputation forintegrity, honesty and adherence to high ethical standards. They each have demonstrated business acumen and an ability to exercise sound judgment, as wellas a commitment to service to the Company and our Board. The following table sets forth information with respect to the directors and executive officers of the Company: Name Age PositionKevin J. Zugibe 49 Chairman of the Board and Chief Executive OfficerBrian F. Coleman 51 President and Chief Operating Officer, DirectorJames R. Buscemi 59 Chief Financial OfficerCharles F. Harkins, Jr. 51 Vice President SalesStephen P. Mandracchia 53 Vice President Legal and Regulatory and SecretaryVincent P. Abbatecola 66 DirectorDominic J. Monetta 71 DirectorOtto C. Morch 79 Director Kevin J. Zugibe, P.E., a founder of the Company, has been Chairman of the Board and Chief Executive Officer of the Company since its inception in 1991.From May 1987 to May 1994, Mr. Zugibe was employed as a power engineer with Orange and Rockland Utilities, Inc., a major public utility, where he wasresponsible for all HVAC applications. Mr. Zugibe is a licensed professional engineer, and from December 1990 to May 1994, he was a member of Kevin J.Zugibe & Associates, a professional engineering firm. We believe Mr. Zugibe’s qualifications to sit on our Board of Directors include his 26 years ofexperience in the air conditioning and refrigeration industry including as our founder, our Chairman and Chief Executive Officer for 21 years. Mr. Zugibe isthe brother-in-law of Stephen P. Mandracchia. Brian F. Coleman has been a Director of the Company since December 2007, and President and Chief Operating Officer of the Company since August 21,2001 and served as Chief Financial Officer of the Company from May 1997 until December 2002. From June 1987 to May 1997, Mr. Coleman wasemployed by, and since July 1995, was a partner with BDO USA, LLP, the Company's independent registered public accounting firm. We believe Mr.Coleman’s qualifications to sit on our Board of Directors include his prior financial and accounting experience obtained as a partner with BDO USA, LLP,and his 16 years of experience in the air conditioning and refrigeration industry including as our President and Chief Operating Officer for the past 10 years. James R. Buscemi has been Chief Financial Officer of the Company since December 2002 and served as Corporate Controller from June 1998 untilDecember 2002. Prior to joining the Company, Mr. Buscemi held various financial positions within Avnet, Inc, including Chief Financial Officer of Avnet'selectric motors and component part subsidiary, Brownell Electro, Inc. Charles F. Harkins, Jr. has been Vice President of Sales of the Company since December 2003. Mr. Harkins has served in a variety of capacities since joiningthe Company in 1992. Prior to joining the Company, Mr. Harkins served in the U.S. Army for 13 years attaining the rank of Staff Sergeant; he is a graduateof the U.S. Army Engineering School and the U.S. Army Chemical School. Stephen P. Mandracchia, a founder of the Company, has been Vice President Legal and Regulatory of the Company since August 2003 and has beenSecretary of the Company since April 1995. Mr. Mandracchia has served in a variety of capacities with the Company since 1993. Mr. Mandracchia was amember of the law firm of Martin, Vandewalle, Donohue, Mandracchia & McGahan, Great Neck, New York until December 31, 1995 (having beenaffiliated with such firm since August 1983). Mr. Mandracchia is the brother in-law of Mr. Zugibe. Vincent P. Abbatecola has been a Director of the Company since June 1994. Mr. Abbatecola is Vice President of Abbey Ice & Spring Water Company, SpringValley, New York, where he has been employed since May 1971. He was formerly the Chairman of the International Packaged Ice Association and a trustee ofNyack Hospital. Mr. Abbatecola serves on the Rockland Board of Governors, the United Hospice of Rockland Board and the St. Thomas Aquinas CollegePresident’s Council. We believe that Mr. Abbatecola’s qualifications to sit on our Board include his business experience obtained as Vice President of Abbey Iceand Spring Water Company, his 19 years of experience in the air conditioning and refrigeration industry by virtue of his service on our Board including asChairman of the Company’s Audit Committee for 18 years. 20Source: HUDSON TECHNOLOGIES INC /NY, 10-K, March 05, 2013Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Dominic J. Monetta, DPA has been a Director of the Company since April 1996. Dr. Monetta has since August 1993, been the President of ResourceAlternatives, Inc., a corporate development firm concentrating on resolving technically oriented managerial issues facing chief executive officers and theirsenior executives. From December 1991 to May 1993, Dr. Monetta served as the Director of Defense Research and Engineering for Research and AdvancedTechnology, United States Department of Defense. From June 1989 to December 1991, Dr. Monetta served as the Director of the Office of New ProductionReactors, United States Department of Energy. Dr. Monetta’s qualifications to sit on our board include his chemical engineering and other managementexperience obtained as a senior executive for the US Departments of Energy and Defense. Dr. Monetta has 16 years of experience in the air conditioning andrefrigeration industry by virtue of his service on our Board and includes his membership on the Company’s Audit Committee for the last 5 years andOccupational, Safety and Environmental Protection Committee for the last 11 years. Otto C. Morch has been a Director of the Company since March 1996. Mr. Morch was a Senior Vice President of Commercial Banking at Provident SavingsBank, F.A. for more than five years until his retirement in December 1997. We believe that Mr. Morch’s qualifications to sit on our Board include hisfinancial and other experience obtained as a Senior Vice President at Provident Savings Bank, F.A., his 17 years of experience in the air conditioning andrefrigeration industry by virtue of his service on our Board including his membership on the Company’s Audit Committee for 17 years. Hudson has established a Compensation/Stock Option Committee of the Board of Directors, which is responsible for recommending the compensation of ourexecutive officers and for the administration of Hudson’s Stock Option Plans. The members of the Committee are Messrs. Abbatecola, Coleman, and Morch. Hudson has an Audit Committee of the Board of Directors, which supervises the audit and financial procedures of Hudson. The members of the AuditCommittee are Messrs. Abbatecola, Monetta and Morch, each of whom is an “independent” director as defined under the rules of NASDAQ. The AuditCommittee does not have a member that qualifies as a “financial expert” under the federal securities laws. Each of the members of the Audit Committee hasbeen active in the business community and has broad and diverse backgrounds, and financial experience. Two of the current members have served onHudson’s Audit Committee and have overseen the financial review by Hudson’s independent auditors for 11 years. Hudson believes that the current membersof the Audit Committee are able to fully and faithfully perform the functions of the Audit Committee and that Hudson does not need to install a “financialexpert” on the Audit Committee. The By-laws of Hudson provide that the Board of Directors is divided into two classes. Each class is to have a term of two years, with the term of each classexpiring in successive years, and is to consist, as nearly as possible, of one-half of the number of directors constituting the entire Board. The By-laws providefor the number of directors to be fixed by the Board of Directors but in any event, shall be no less than five (5) (subject to decrease by a resolution adopted bythe shareholders). At Hudson’s August 7, 2012 Annual Meeting of the Shareholders, Messrs. Monetta and Zugibe were elected as directors to terms of officethat will expire at the Annual Meeting of Shareholders to be held in the year 2014. Messrs. Abbatecola, Coleman and Morch are currently serving as directorsand their terms of office expire at the Annual Meeting of Shareholders to be held in the year 2013. Section 16(a) Beneficial Ownership Reporting Compliance Section 16(a) of the Exchange Act requires our officers and directors, and persons who own more than 10 percent of a registered class of our equity securities,to file reports of ownership and changes in ownership with the SEC. Officers, directors, and greater than 10 percent shareholders are required by SECregulation to furnish Hudson with copies of all Section 16(a) forms they file. Based solely on Hudson’s review of copies of such forms received by Hudson, and on representations made to us, we believe that during the year endedDecember 31, 2012, all filing requirements applicable to all officers, directors and greater than 10% beneficial shareholders were complied with. Code of Conduct and Ethics We have adopted a written code of conduct and ethics that applies to all directors, and employees, including Hudson’s principal executive officer, principalfinancial officer, principal accounting officer or controller and any persons performing similar functions. We will provide a copy of its code of ethics to anyperson without charge upon written request addressed to Hudson Technologies, Inc., One Blue Hill Plaza, PO Box 1541, Pearl River, New York 10965,Attention: Stephen P. Mandracchia. 21Source: HUDSON TECHNOLOGIES INC /NY, 10-K, March 05, 2013Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Item 11. Executive Compensation The following table discloses, for the years indicated, the compensation for our Chief Executive Officer and for our two most highly compensated executiveofficers, other than the Chief Executive Officer, who were serving as executive officers at the end of the year ended December 31, 2012 and whose totalcompensation during the year ending December 31, 2012 exceeded $100,000 (the “Named Executives”). SUMMARY COMPENSATION TABLE Name andPrincipalPosition Year Salary($) Bonus($) (3) StockAwards($) OptionAwards(1) ($) Non-EquityIncentive PlanCompensation($) Non-qualifiedDeferredCompensationEarnings All OtherCompensation($) (4) Total ($) Kevin J. Zugibe, 2012 $264,580 $264,000 $0 $0 $0 $0 $0 $528,580 Chairman, Chief ExecutiveOfficer (2) 2011 $223,007 $132,000 $0 $0 $0 $0 $0 $355,007 Brian F. Coleman, 2012 $205,465 $174,000 $0 $0 $0 $0 $9,623 $389,088 President, Chief OperatingOfficer, Director (2) 2011 $197,363 $84,000 $0 $0 $0 $0 $0 $281,363 Charles F. Harkins, Jr., 2012 $187,618 $145,000 $0 $0 $0 $0 $8,371 $ 340,989 Vice President Sales 2011 $182,181 $71,000 $0 $0 $0 $0 $0 $253,181 (1) We utilize the grant date fair value using the Black-Scholes method as described in Note 10 to the Notes to the Consolidated Financial Statements.(2) Messrs. Coleman and Zugibe did not receive any compensation for services as a director during the years ended December 31, 2012 and 2011.(3) Non-Equity Incentive Plan Compensation was earned in 2012, a portion of which was paid in 2012. The balance will be paid in 2013.(4) Represents payments of annual premiums for long term care insurance purchased for the benefit of the executive officers and, where applicable, theexecutive officer’s spouse. Narrative Disclosure to Summary Compensation Table Employment, Termination, Change of Control and other Agreements Kevin J. Zugibe. On October 10, 2006, we entered into an Amended and Restated Employment Agreement with Kevin J. Zugibe, which currently expires inOctober 2014 and is automatically renewable for successive two year terms unless either party gives notice of termination at least ninety days prior to theexpiration date of the then current term. Pursuant to the agreement, as amended by the First Amendment to Restated Employment Agreement dated December29, 2008, Mr. Zugibe is receiving an annual base salary of $288,500 with such increases and bonuses as our Board of Directors may determine. Theagreement provides, in the event of Mr. Zugibe's disability, for the continuation of at least 75% of Mr. Zugibe's salary for up to one hundred twenty days afterthe commencement of his disability. Mr. Zugibe is also entitled to take up to four weeks of vacation, excluding paid holidays. As part of the agreement, Mr. Zugibe has agreed to certain covenants and restrictions, which include an agreement that Mr. Zugibe will not compete with us inspecified geographic areas for a period of twenty-four months after his termination for any reason. The agreement also provides that, in the event of hisinvoluntary separation from Hudson without cause, or in the event of his voluntary separation for a good reason as enumerated in the agreement, Mr. Zugibewill receive severance payments, in the form of the continuation of his annual base salary and benefits for a period of twenty-four months, and a lump sumpayment equivalent to the highest bonus paid to Mr. Zugibe in the three years prior to his termination, pro-rated to the date of his termination. We are thebeneficiary of a “key-man” insurance policy on the life of Mr. Zugibe in the amount of $1,000,000. 22Source: HUDSON TECHNOLOGIES INC /NY, 10-K, March 05, 2013Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Brian F. Coleman. On October 10, 2006, we entered into an agreement with Brian F. Coleman, pursuant to which, as amended, Mr. Coleman has agreed tocertain covenants and restrictions, which include an agreement that Mr. Coleman will not compete with us in specified geographic areas for a period of eighteenmonths after his termination for any reason. The agreement provides, in the event of his disability, for the continuation of at least 75% of his salary for up toone hundred twenty days after the commencement of his disability. The agreement also provides that, in the event of his involuntary separation without cause,or in the event of his voluntary separation for a good reason as enumerated in the agreement, Mr. Coleman will receive severance payments, in the form of thecontinuation of his annual base salary and benefits for a period of eighteen months, and a lump sum payment equivalent to the highest bonus paid to him inthe three years prior to his termination, pro-rated to the date of his termination. Charles F. Harkins. On October 10, 2006, we entered into an agreement with Charles F. Harkins, pursuant to which, as amended, Mr. Harkins has agreed tocertain covenants and restrictions, which include an agreement that Mr. Harkins will not compete with us in specified geographic areas for a period of eighteenmonths after his termination for any reason. The agreement provides, in the event of his disability, for the continuation of at least 75% of his salary for up toone hundred twenty days after the commencement of his disability. The agreement also provides that in the event of his involuntary separation without cause,or in the event of his voluntary separation for a good reason as enumerated in the agreement, Mr. Harkins will receive severance payments, in the form of thecontinuation of his annual base salary and benefits for a period of eighteen months, and a lump sum payment equivalent to the highest bonus paid to him inthe three years prior to his termination, pro-rated to the date of his termination. On December 31, 2012, the independent members of our board resolved to establish a pool at the end of fiscal year 2013 for the payment of cash awards basedupon our 2013 earnings to some or all of the executive officers, as well as to several other of our key employees. The amount of the pool to be established is notexpected to exceed $1,000,000, but will be determined by the independent board members at the end of fiscal year 2013 based upon our achieving earnings inexcess of a pre-determined level for fiscal 2013 (the “Benchmark”). In the event our 2013 earnings exceed the Benchmark, the cash awards may be paid out ofthe pool to some or all of the executive officers. The independent board members will determine which, if any, of the executive officers are to receive a cashaward from the pool, as well as the amount of the cash award to be paid to each executive officer, which determination will be made, in the discretion of theindependent board members, based upon our overall 2013 financial results of the Company as well as on the personal performance of each executive officerduring 2013. Stock Option Grants or Stock Awards The Company did not issue stock options, or grant any stock awards to any of the Named Executives in 2012. 23Source: HUDSON TECHNOLOGIES INC /NY, 10-K, March 05, 2013Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END The following table discloses the outstanding option awards held by the Named Executives as of December 31, 2012. No options were exercised by the NamedExecutives during the fiscal year ended December 31, 2012. No stock awards have been issued to the Named Executives. Name Number of SecuritiesUnderlying UnexercisedOptions(#)Exercisable OptionExercisePrice($) Option ExpirationDateKevin J. Zugibe, Chairman,Chief Executive Officer 87,500 $1.13 3/5/2014 193,750 $1.15 3/31/2014 18,750 $0.83 9/17/2014 18,750 $0.95 10/1/2014 93,750 $1.02 1/3/2015 18,750 $0.87 4/1/2015 18,750 $0.83 7/8/2015 18,750 $2.15 9/30/2015 123,750 $1.76 12/29/2015 35,000 $1.40 3/31/2016 9,300 $1.02 10/10/2016 195,000 $0.85 11/20/2017 78,000 $1.26 12/17/2019 Brian F. Coleman, President,Chief Operating Officer,Director 75,000 $1.13 3/5/2014 18,750 $1.15 3/31/2014 12,500 $0.83 9/17/2014 12,500 $0.95 10/1/2014 62,500 $1.02 1/3/2015 12,500 $0.87 4/1/2015 12,500 $0.83 7/8/2015 12,500 $2.15 9/30/2015 82,500 $1.76 12/29/2015 32,500 $1.40 3/31/2016 8,100 $1.02 10/10/2016 180,000 $0.85 11/20/2017 75,000 $1.26 12/17/2019 Charles F. Harkins, Jr., VicePresident Sales 60,639 $1.76 12/29/2015 23,125 $1.40 3/31/2016 7,900 $1.02 10/10/2016 78,600 $0.85 11/20/2017 72,000 $1.26 12/17/2019 24Source: HUDSON TECHNOLOGIES INC /NY, 10-K, March 05, 2013Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Stock Option Plans 1994 Stock Option Plan We adopted an Employee Stock Option Plan (the “1994 Plan”) effective October 31, 1994 pursuant to which 725,000 shares of our common stock werereserved for issuance upon the exercise of options designated as either (i) options intended to constitute incentive stock options (“ISOs”) under the InternalRevenue Code of 1986, as amended (the “Code”), or (ii) nonqualified options. ISOs could be granted under the 1994 Plan to our employees and officers. Non-qualified options could be granted to consultants, directors (whether or not they are employees), our employees or officers. Effective November 1, 2004, ourability to grant options under the 1994 Plan expired. All options granted under the 1994 Plan are not transferable during an optionee's lifetime but are transferable at death by will or by the laws of descent anddistribution. In general, upon termination of employment of an optionee, all options granted to such person that are not exercisable on the date of suchtermination immediately terminate, and any options that are exercisable terminate 90 days following termination of employment. As of December 31, 2012, we had options outstanding to purchase 46,250 shares of our common stock under the 1994 Plan. 1997 Stock Option Plan We adopted the 1997 Stock Option Plan (the “1997 Plan”) effective June 11, 1997 pursuant to which 2,000,000 shares of our common stock were reservedfor issuance upon the exercise of options designated as either (i) ISOs under the Code, or (ii) nonqualified options. ISOs could be granted under the 1997 Planto our employees and officers. Non-qualified options could be granted to consultants, directors (whether or not they are employees), our employees or officers.Stock appreciation rights could also be issued in tandem with stock options. Effective June 11, 2007 our ability to grant options under the 1997 Plan expired. All options granted under the 1997 Plan are not transferable during an optionee's lifetime but are transferable at death by will or by the laws of descent anddistribution. In general, upon termination of employment of an optionee, all options granted to such person that are not exercisable on the date of suchtermination immediately terminate, and any options that are exercisable terminate 90 days following termination of employment. As of December 31, 2012, we had options outstanding to purchase 749,254 shares of our common stock under the 1997 Plan. 2004 Stock Incentive Plan We have adopted the 2004 Stock Incentive Plan (the “2004 Plan”), pursuant to which 2,500,000 shares of our common stock are currently reserved forissuance upon the exercise of options, designated as either (i) ISOs, under the Code or (ii) non-qualified options, or for issuance upon the granting of restrictedstock, deferred stock or other stock-based awards. ISOs may be granted under the 2004 Plan to employees and officers of Hudson. Non-qualified options,restricted stock, deferred stock or other stock-based awards may be granted to consultants, directors (whether or not they are employees), employees or officersof Hudson. Stock appreciation rights may also be issued in tandem with stock options. The 2004 Plan is intended to qualify under Rule 16b-3 under the Exchange Act and is administered by our Compensation/Stock Option Committee of theBoard of Directors. The Committee, within the limitations of the 2004 Plan, determines the persons to whom options will be granted, the number of shares tobe covered by each option, whether the options granted are intended to be ISOs, the duration and rate of exercise of each option, the exercise price per share andthe manner of exercise and the time, manner and form of payment upon exercise of an option. In the case of restricted stock, deferred stock or other stock-based awards, the Committee, within the limitations of the 2004 Plan, determines the persons to whom awards will be granted, the number of shares of stocksubject to the award, and the restrictions on issuance and transfer of such shares. Unless the 2004 Plan is sooner terminated, the ability to grant options orother awards under the 2004 Plan will expire on September 10, 2014. ISOs granted under the 2004 Plan may not be granted at a price less than the fair market value of our common stock on the date of grant (or 110% of fairmarket value in the case of ISO’s granted to a 10% shareholder). In the case of ISOs, the aggregate fair market value of shares for which ISOs granted to anyemployee are exercisable for the first time by such employee during any calendar year (under all of our stock option plans) may not exceed $100,000. Non-qualified options granted under the 2004 Plan may not be granted at a price less than the fair market value of our common stock. Options granted under the2004 Plan will expire not more than ten years from the date of grant (five years in the case of ISOs granted to a 10% shareholder). Except as otherwise providedby the Committee with respect to non-qualified options, all options, restricted stock, deferred stock or other stock-based awards granted under the 2004 Planare not transferable during a grantee’s lifetime but are transferable at death by will or by the laws of descent and distribution. In general, upon termination ofemployment of a grantee, all options, restricted stock, deferred stock or other stock-based awards granted to such person which are not exercisable on the dateof such termination immediately terminate, and any options that are exercisable terminate 90 days following termination of employment. 25Source: HUDSON TECHNOLOGIES INC /NY, 10-K, March 05, 2013Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. As of December 31, 2012, we had options outstanding to purchase 2,161,588 shares of common stock and 28,313 shares are reserved for future issuancesunder the 2004 Plan. 2008 Stock Incentive Plan We have adopted the 2008 Stock Incentive Plan (the “2008 Plan”), pursuant to which 3,000,000 shares of our common stock are currently reserved forissuance upon the exercise of options, designated as either (i) ISOs, under the Code or (ii) non-qualified options, or for issuance upon the granting of restrictedstock, deferred stock or other stock-based awards. ISOs may be granted under the 2008 Plan to employees and officers of Hudson. Non-qualified options,restricted stock, deferred stock or other stock-based awards may be granted to consultants, directors (whether or not they are employees), employees or officersof Hudson. Stock appreciation rights may also be issued in tandem with stock options. The 2008 Plan is intended to qualify under Rule 16b-3 under the Exchange Act and is administered by our Compensation and Stock Option Committee of theBoard of Directors. The Committee, within the limitations of the 2008 Plan, determines the persons to whom options will be granted, the number of shares tobe covered by each option, whether the options granted are intended to be ISOs, the duration and rate of exercise of each option, the exercise price per share andthe manner of exercise and the time, manner and form of payment upon exercise of an option. In the case of restricted stock, deferred stock or other stock-based awards, the Committee, within the limitations of the 2008 Plan, determines the persons to whom awards will be granted, the number of shares of stocksubject to the award, and the restrictions on issuance and transfer of such shares. Unless the 2008 Plan is sooner terminated, the ability to grant options orother awards under the 2008 Plan will expire on June 19, 2018. ISOs granted under the 2008 Plan may not be granted at a price less than the fair market value of our common stock on the date of grant (or 110% of fairmarket value in the case of ISO’s granted to a 10% shareholder). In the case of ISOs, the aggregate fair market value of shares for which ISOs granted to anyemployee are exercisable for the first time by such employee during any calendar year (under all of our stock option plans) may not exceed $100,000. Non-qualified options granted under the 2008 Plan may not be granted at a price less than the fair market value of our common stock. Options granted under the2008 Plan will expire not more than ten years from the date of grant (five years in the case of ISOs granted to a 10% shareholder). Except as otherwise providedby the Committee with respect to non-qualified options, all options, restricted stock, deferred stock or other stock-based awards granted under the 2008 Planare not transferable during a grantee’s lifetime but are transferable at death by will or by the laws of descent and distribution. In general, upon termination ofemployment of a grantee, all options, restricted stock, deferred stock or other stock-based awards granted to such person which are not exercisable on the dateof such termination immediately terminate, and any options that are exercisable terminate 90 days following termination of employment. As of December 31, 2012, we had options outstanding to purchase 391,843 shares of common stock and 2,608,157 shares are reserved for future issuancesof awards under the 2008 Plan. Director Compensation Effective July 1, 2012 non-employee directors receive an annual fee of $38,000 per year, of which $18,000 is to be paid in the form of cash, and $20,000shall be paid in the form of stock options, and receive reimbursement for out-of-pocket expenses incurred for attendance at meetings of the Board of Directorsand Board Committee meetings. In 2012, non-employee directors each received a total annual fee of $35,000 and reimbursement for out-of-pocket expensesincurred for attendance at meetings of the Board of Directors and Board committee meetings. The following table discloses the compensation of the non-employee directors who served as our directors during the year ended December 31, 2012. We reimburse each of our non-employee directors for their reasonableexpenses incurred in connection with attending meetings of our board of directors and related committees. DIRECTOR COMPENSATIONName Fees earned orpaid incash StockAwards OptionAwards (1) Non-EquityIncentive PlanCompensation NonqualifiedDeferredCompensationEarnings All OtherCompensation Total Vincent P. Abbatecola (2) $15,000 $0 $20,000 $0 $0 $0 $35,000 Dominic J. Monetta(2) $15,000 $0 $20,000 $0 $0 $0 $35,000 Otto C. Morch (2) $15,000 $0 $20,000 $0 $0 $0 $35,000 26Source: HUDSON TECHNOLOGIES INC /NY, 10-K, March 05, 2013Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. (1) We utilize the grant date fair value using the Black-Scholes method as described in Note 10 to the Notes to the Consolidated Financial Statements.(2) As of December 31, 2012, Mr. Abbatecola has options to purchase 140,281 shares of common stock outstanding, Mr. Morch has options to purchase120,281 shares of common stock outstanding, and Dr. Monetta has options to purchase 100,281 shares of common stock outstanding. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters The following table sets forth information as of March 1, 2013 based on information obtained from the persons named below, with respect to the beneficialownership of Hudson’s common stock by (i) each person known by Hudson to be the beneficial owner of more than 5% of Hudson’s outstanding commonstock, (ii) the Named Executives, (iii) each director of Hudson, and (iv) all of our directors and executive officers as a group: BENEFICIAL OWNERSHIP TABLE Title of Class Name of Beneficial Owner Amount and Nature ofBeneficial Ownership (1) Percent of Class Common Stock Kevin J. Zugibe 5,007,555(2) 19.96%Common Stock Brian F. Coleman 947,176(3) 3.82%Common Stock Charles F. Harkins 242,264(4) * Common Stock James R. Buscemi 535,055(5) 2.19%Common Stock Stephen P. Mandracchia 2,220,195(6) 9.04%Common Stock Vincent P. Abbatecola 180,281(7) * Common Stock Dominic J. Monetta 220,381(8) * Common Stock Otto C. Morch 126,581(9) * Common Stock Marathon Capital Management, LLC 1,703,064(10) 7.04%Common Stock Matthew A. Drapkin 2,368,431(11) 9.55%Common Stock All directors and executive officers as a group(Eight Persons) 9,479,488(12) 35.18% * = Less than 1% (1) A person is deemed to be the beneficial owner of securities that can be acquired by such person within 60 days from March 1, 2013. Each beneficialowner's percentage ownership is determined by assuming that options and warrants that are held by such person (but not held by any other person) and whichare exercisable within 60 days from March 1, 2013 have been exercised. Unless otherwise noted, Hudson believes that all persons named in the table have solevoting and investment power with respect to all shares of our common stock beneficially owned by them. The address for each beneficial owner, unlessotherwise noted, is c/o Hudson Technologies, Inc. at PO Box 1541, One Blue Hill Plaza, Pearl River, New York 10965. (2) Includes (i) 87,500 shares which may be purchased at $1.13 per share; (ii) 193,750 shares which may be purchased at $1.15 per share; (iii) 37,500shares which may be purchased at $.83 per share; (iv) 18,750 shares which may be purchased at $.95 per share; (v) 93,750 shares which may bepurchased at $1.02 per share; (vi) 18,750 shares which may be purchased at $.87 per share; (vii) 18,750 shares which may be purchased at $2.15 pershare; (viii) 123,750 shares which may be purchased at $1.76 per share; (ix) 35,000 shares which may be purchased at $1.40 per share; (x) 9,300 shareswhich may be purchased at $1.02 per share, (xi) 195,000 shares that may be purchased at $0.85 per share; and (xii) 78,000 shares which may be purchasedat $1.26 per share, under immediately exercisable options. (3) Includes (i) 75,000 shares which may be purchased at $1.13 per share; (ii) 18,750 shares which may be purchased at $1.15 per share; (iii) 25,000shares which may be purchased at $.83 per share; (iv) 12,500 shares which may be purchased at $.95 per share; (v) 62,500 shares which may bepurchased at $1.02 per share; (vi) 12,500 shares which may be purchased at $.87 per share; (vii) 12,500 shares which may be purchased at $2.15 pershare; (viii) 82,500 shares which may be purchased at $1.76 per share; (ix) 32,500 shares which may be purchased at $1.40 per share; (x) 8,100 shareswhich may be purchased at $1.02 per share, (xi) 180,000 shares which may be purchased at $0.85 per share; and (xii) 75,000 shares which may bepurchased at $1.26 per share, under immediately exercisable options. (4) Includes (i) 60,639 shares which may be purchased at $1.76 per share; (ii) 23,125 shares which may be purchased at $1.40 per share; (iii) 7,900 shareswhich may be purchased at $1.02; (iv) 78,600 which may be purchased at $0.85 per share; and (v) 72,000 shares which may be purchased at $1.26 pershare, under immediately exercisable options. 27Source: HUDSON TECHNOLOGIES INC /NY, 10-K, March 05, 2013Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. (5) Includes the following shares which may be purchased by Mr. Buscemi upon the exercise of options previously granted to him: (i) 6,250 shares whichmay be purchased at $1.13 per share; (ii) 9,375 shares which may be purchased at $1.15 per share; (iii) 8,595 shares which may be purchased at $.83 pershare; (iv) 6,125 shares which may be purchased at $.95 per share; (v) 31,250 shares which may be purchased at $1.02 per share; (vi) 6,250 shareswhich may be purchased at $.87 per share; (vii) 6,250 shares which may be purchased at $2.15 per share; (viii) 41,250 shares which may be purchased at$1.76 per share; (ix) 16,625 shares which may be purchased at $1.40 per share; (x) 6,500 shares which may be purchased at $1.02 per share; (xi) 100,000shares that may be purchased at $0.85 per share; and (xii) 48,000 shares which may be purchased at $1.26 per share, under immediately exercisable options. (6) Includes (i) 1,402,920 shares held of record in the name of Mr. Mandracchia’s wife, Theresa Mandracchia, over which Mr. Mandracchia has sole votingpower and shared dispositive power, and (ii) the following shares which may be purchased by Mr. Mandracchia upon the exercise of options previouslygranted to him: (a) 40,000 shares which may be purchased at $1.13 per share; (b) 9,375 shares which may be purchased at $1.15 per share; (c) 12,500shares which may be purchased at $.83 per share; (d) 6,250 shares which may be purchased at $.95 per share; (e) 31,250 shares which may be purchasedat $1.02 per share; (f) 6,250 shares which may be purchased at $.87 per share; (g) 6,250 shares which may be purchased at $2.15 per share; (h) 51,250shares which may be purchased at $1.76 per share; (i) 20,750 shares which may be purchased at $1.40 per share; (j) 7,400 shares which may be purchasedat $1.02 per share; (k) 125,000 shares that may be purchased at $0.85 per share; and (l) 58,000 shares which may be purchased at $1.26 per share, underimmediately exercisable options. (7) Includes (i) 40,000 shares which may be purchased at $0.85 per share; (ii) 40,000 shares which may be purchased at $1.21 per share; (iii) 25,000 shareswhich may be purchased at $1.72 per share; (iv) 25,000 shares that may be purchased at $1.31 per share; and (v) 10,281 shares which may be purchased at$ 3.27 per share, under immediately exercisable options. (8) Includes (i) 40,000 shares which may be purchased at $1.21 per share; (ii) 25,000 shares which may be purchased at $1.72 per share; (iii) 25,000 shareswhich may be purchased at $1.31 per share; and (iv) 10,281 shares which may be purchased at $3.27 per share, under immediately exercisable options (9) Includes (i) 20,000 shares which may be purchased at $ 0.85 per share; (ii) 40,000 shares which may be purchased at $ 1.21 per share; (iii) 25,000shares that may be purchased at $1.72 per share; (iv) 25,000 shares which may be purchased at $1.31 per share; and, (v) 10,281 shares which may bepurchased at $3.27 per share, under immediately exercisable options. (10) Represents aggregate amount of beneficially owned common stock as reported in a Schedule 13G/A filed by Marathon Capital Management, LLC onJanuary 9, 2013. The address of Marathon Capital Management, LLC is 4 North Park Drive, Suite 106, Hunt Valley, MD 21030. (11) Represents aggregate amount of beneficially owned common stock as reported in a Schedule 13G Amendment #2 filed by Becker Drapkin Management,L.P., Becker Drapkin Partners (QP), L.P, Becker Drapkin Partners, L.P., BC Advisors, LLC, Steven R. Becker and Matthew A. Drapkin on February 10,2012, which includes warrants to purchase 625,000 shares. The address of Becker Drapkin Management, L.P. is 300 Crescent Court, Suite 1111, Dallas,Texas, 75201. (12) Includes exercisable options to purchase 2,770,502 shares of common stock which may be purchased under immediately exercisable options. Equity Compensation Plan The following table provides certain information with respect to all of Hudson’s equity compensation plans as of December 31, 2012. Number of securities to beissued upon exercise ofoutstanding options,warrants and rights Weighted-average exerciseprice of outstanding options,warrants and rights Number of securities remainingavailable for future issuanceunder equity compensation plans(excluding securities reflected incolumn (a)) Plan Category (a) (b) (c) Equity compensation plans approved by security holders 3,348,935 $1.23 2,636,470 Equity compensation plans not approved by security holders(1) 73,500 $1.44 0 Total 3,422,435 $1.24 2,636,470 (1) Includes (i) 73,500 five-year warrants, issued in 2009 to our placement agent in connection with the 2009 Offering exercisable, at $1.4375 per share. 28Source: HUDSON TECHNOLOGIES INC /NY, 10-K, March 05, 2013Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Item 13. Certain Relationships and Related Transactions, and Director Independence Our Board of Directors is comprised of five members, of which three directors are independent as defined under NASDAQ marketplace rules. Theindependent members of the Board are Messrs. Abbatecola, Monetta and Morch. Messrs. Coleman and Zugibe are not independent as defined underNASDAQ marketplace rules. The independent members of our Board of Directors determine the compensation of our executive officers. The Board of Directors has established aCompensation/Stock Option Committee, which is responsible for recommending to the independent directors the compensation of our executive officers andfor the administration of our employee benefit plans. The members of such committee are Messrs. Abbatecola, Coleman and Morch. In September 2007, the Board established a Nominating Committee consisting of Messrs. Abbatecola, Monetta and Zugibe, and which is responsible forrecommending to the independent directors nominees for election to the Board. Nominations to the Board are made by vote of the independent directors of theBoard. The members of our Audit Committee of our Board of Directors are Messrs. Abbatecola, Monetta, and Morch, all of whom are independent as defined underNASDAQ marketplace rules. Review, approval or ratification of transactions with related persons Each year, all of our directors and officers are asked to disclose the existence of family relationships and other related transactions in Director and OfficerQuestionnaires. Our Audit Committee is responsible for reviewing and approving or ratifying related-person transactions. A related person is any executiveofficer, director or more than 5% stockholder, or any immediate family member of the foregoing persons, or entity owned or controlled by such person. Inaddition, pursuant to our Code of Business Conduct and Ethics, all of our employees and directors are required to bring any conflict of interest to the attentionof one of the Company’s executive officers or directors. In determining whether to approve or ratify a related party transaction, the Audit Committee willconsider, among other factors it deems appropriate, whether the related party transaction is on terms no less favorable to us than terms generally available to usfrom an unaffiliated third-party under the same or similar circumstances, and the extent of the related party’s interest in the transaction. Any transaction whichis deemed to be a related party transaction requires the approval, initially by a majority of the non-interested Audit Committee members and finally by amajority of the non-interested Board members. There are no other written procedures governing any review of related person transactions. Item 14. Principal Accounting Fees and Services Audit Fees. The aggregate fees billed by BDO USA, LLP for professional services rendered for the audits and reviews of the Company's financial statementsfor the years ended December 31, 2012 and 2011 totaled $169,000 and $173,000, respectively. Audit-Related Fees. In 2012 and 2011, the aggregate fees billed by BDO USA, LLP for assurance and related services that are reasonably related to theperformance of the audit or review of the Company's financial statements were none and $204,000, respectively. The 2011 fees were related to due diligenceservices. Tax Fees. In 2012 and 2011 the aggregate fees billed by BDO USA, LLP for professional services rendered for tax advice totaled $35,000 and $32,000,respectively. All Other Fees. In 2012 and 2011, all other fees billed by BDO USA LLP for professional services rendered other than the services described in theparagraphs caption “Audit Fees”, “Audit Related Fees” and “Tax Fees” were none. The Audit Committee has established its pre-approval policies and procedures, pursuant to which the Audit Committee approved the foregoing audit servicesprovided by BDO USA, LLP in 2012. Consistent with the Audit Committee's responsibility for engaging the Company’s independent auditors, all audit andpermitted non-audit services require pre-approval by the Audit Committee. The full Audit Committee approves proposed services and fee estimates for theseservices. The Audit Committee chairperson or their designee has been designated by the Audit Committee to approve any services arising during the year thatwere not pre-approved by the Audit Committee. Services approved by the Audit Committee chairperson are communicated to the full Audit Committee at itsnext regular meeting and the Audit Committee reviews services and fees for the fiscal year at each such meeting. Pursuant to these procedures, the AuditCommittee approved the foregoing audit services provided by BDO USA, LLP. 29Source: HUDSON TECHNOLOGIES INC /NY, 10-K, March 05, 2013Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Part IV Item 15. Exhibits, Financial Statement Schedules (A)(1) Financial Statements The consolidated financial statements of Hudson Technologies, Inc. appear after Item 15 of this report(A)(2) Financial Statement Schedules None(A)(3) Exhibits3.1 Certificate of Incorporation and Amendment. (1)3.2 Amendment to Certificate of Incorporation, dated July 20, 1994. (1)3.3 Amendment to Certificate of Incorporation, dated October 26, 1994. (1)3.4 Certificate of Amendment of the Certificate of Incorporation dated March 16, 1999. (2)3.5 Certificate of Correction of the Certificate of Amendment dated March 25, 1999. (2)3.6 Certificate of Amendment of the Certificate of Incorporation dated March 29, 1999. (2)3.7 Certificate of Amendment of the Certificate of Incorporation dated February 16, 2001. (4)3.8 Certificate of Amendment of the Certificate of Incorporation of Hudson Technologies, Inc., dated March 20, 2002. (5)3.9 Amendment to Certificate of Incorporation dated January 3, 2003. (6)3.10 Amended and Restated By-Laws adopted July 29, 2011. (15)10.1 Assignment of patent rights from Kevin J. Zugibe to Registrant. (1)10.2 1997 Stock Option Plan of the Company, as amended. (3) *10.3 1994 Stock Option Plan of the Company. (1)*10.4 2004 Stock Incentive Plan. (10)*10.5 Form of Incentive Stock Option Agreement under the 2004 Stock Incentive Plan of the Company with full vesting upon issuance. (7)10.6 Form of Incentive Stock Option Agreement under the 2004 Stock Incentive Plan of the Company with options vesting in equal quarterlyinstallments over two year period. (7)10.7 Form of Non-Incentive Stock Option Agreement under the 2004 Stock Incentive Plan of the Company with full vesting upon issuance. (7)10.8 Commercial Mortgage, dated May 27, 2005, between Hudson Technologies Company and Busey Bank. (8)10.9 Commercial Installment Mortgage Note, dated May 27, 2005, between Hudson Technologies Company and Busey Bank. (8)10.10 Amended and Restated Employment Agreement with Kevin J. Zugibe, as amended. (12)*10.11 Agreement with Brian F. Coleman, as amended. (12)*10.12 Agreement with James R. Buscemi, as amended. (12)*10.13 Agreement with Charles F. Harkins, as amended. (12)*10.14 Agreement with Stephen P. Mandracchia, as amended. (12)*10.15 2008 Stock Incentive Plan. (11)10.16 Form of Incentive Stock Option Agreement under the 2008 Stock Incentive Plan with full vesting upon issuance. (12)10.17 Form of Incentive Stock Option Agreement under the 2008 Stock Incentive Plan with options vesting in equal installments over two yearperiod. (12)10.18 Form of Non-Incentive Stock Option Agreement under the 2008 Stock Incentive Plan with full vesting upon issuance. (12)10.19 Form of Non-Incentive Stock Option Agreement under the 2008 Stock Incentive Plan with options vesting in equal installments over twoyear period. (12)10.20 Warrant, dated August 5, 2009, for 73,500 shares of Common Stock issued to Roth Capital Partners, LLC. (19)10.21 First Amendment to Amended and Restated Employment Agreement with Kevin J. Zugibe, dated December 30, 2008. (12)*10.22 Form of Warrant issued in the 2010 Offering. (13)10.23 Warrant Repurchase Agreement dated March 4, 2011 between the Company and Sonar Partners Fund, L.P. (14)10.24 Warrant Repurchase Agreement dated March 4, 2011 between the Company and Sonar Overseas Fund, Ltd. (14)10.25 Form of Agreement and Consent, to amend warrants issued in connection with the 2010 Offering, dated March 7, 2011. (14)10.26 Revolving Credit, Term Loan and Security Agreement, dated June 22, 2012, between Hudson Technologies Company as borrower andPNC Bank, National Association as lender and agent (16)10.27 $23,000,000 Revolving Credit Note, dated June 22, 2012, by Hudson Technologies Company as borrower in favor of PNC (16) 10.28 $4,000,000 Term Note, dated June 22.2012, by Hudson Technologies Company as borrower in favor of PNC. (16) 30Source: HUDSON TECHNOLOGIES INC /NY, 10-K, March 05, 2013Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. 10.29 Guaranty & Suretyship Agreement, dated June 22, 2012, made by Hudson Holdings, Inc. as guarantor on behalf of Hudson TechnologiesCompany. (16)10.30 Guaranty & Suretyship Agreement, dated June 22, 2012, made by the Company as guarantor on behalf of Hudson TechnologiesCompany. (16)10.31 Patent, Trademarks, and Copyrights Security Agreement, dated June 22, 2012, between the Company and PNC. (16)10.32 Patent, Trademarks, and Copyrights Security Agreement, dated June 22, 2012, between Hudson Technologies Company and PNC. (16)10.33 Long Term Care Insurance Plan Summary. (17)*10.34 First Amendment to Revolving Credit, Term Loan, and Security Agreement between Hudson Technologies Company and PNC datedFebruary 15, 2013. (18)10.35 $36,000,000 Amended and Restated Revolving Credit Note, dated February 15, 2013, by Hudson Technologies Company as borrower infavor of PNC. (18)10.36 Guarantors’ Ratification dated February 15, 2013, by the Company and Hudson Holdings, Inc. (18)14 Code of Business Conduct and Ethics. (9)21 Subsidiaries of the Company. (20)23.1 Consent of BDO USA, LLP. (20)31.1 Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (20)31.2 Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (20)32.1 Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of Sarbanes-OxleyAct of 2002. (20)32.2 Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of Sarbanes-OxleyAct of 2002. (20)101 Interactive data file pursuant to Rule 405 of Regulation S-T.(20)______ (1) Incorporated by reference to the comparable exhibit filed with the Company's Registration Statement on Form SB-2 (No. 33-80279-NY).(2) Incorporated by reference to the comparable exhibit filed with the Company's Quarterly Report on Form 10-QSB for the quarter ended June30, 1999.(3) Incorporated by reference to the comparable exhibit filed with the Company's Annual Report on Form 10-KSB for the year ended December31, 1999.(4) Incorporated by reference to the comparable exhibit filed with the Company's Annual Report on Form 10-KSB for the year ended December31, 2000.(5) Incorporated by reference to the comparable exhibit filed with the Company’s Annual Report on Form 10-KSB for the year ended December31, 2001.(6) Incorporated by reference to the comparable exhibit filed with the Company's Annual Report on Form 10-KSB for the year ended December31, 2002.(7) Incorporated by reference to the comparable exhibit filed with the Company’s Annual Report on Form 10-KSB for the year ended December31, 2004.(8) Incorporated by reference to the comparable exhibit filed with the Company’s Quarterly Report on Form 10-QSB for the quarter ended June30, 2005.(9) Incorporated by reference to the comparable exhibit filed with the Company’s Current Report on Form 8-K, for the event dated March 3,2005, and filed May 31, 2005.(10) Incorporated by reference to Appendix B to the Company’s Definitive Proxy Statement on Schedule 14A filed August 18, 2004.(11) Incorporated by reference to Appendix I to the Company’s Definitive Proxy Statement on Schedule 14A filed July 29, 2008.(12) Incorporated by reference to the comparable exhibit filed with the Company’s Annual Report on Form 10-K for the year ended December31, 2008.(13) Incorporated by reference to the comparable exhibit filed with the Company’s Current Report on Form 8-K for the event dated July 1, 2010and filed July 2, 2010.(14) Incorporated by reference to the comparable exhibit filed with the Company’s Annual Report on Form 10-K for the year ended December31, 2010.(15) Incorporated by reference to the comparable exhibit filed with the Company’s Quarterly Report on Form-10-Q for the quarter ended June30, 2011.(16) Incorporated by reference to the comparable exhibit filed with the Company’s Report on Form 8-K for the event dated June 22, 2012 andfiled June 28, 2012. 31Source: HUDSON TECHNOLOGIES INC /NY, 10-K, March 05, 2013Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. (17) Incorporated by reference to the comparable exhibit filed with the Company’s Quarterly Report on Form 10-Q for the quarter endedSeptember 30, 2012.(18) Incorporated by reference to the comparable exhibit filed with the Company’s Current Report on Form 8-K for the event dated February15, 2013 and filed February 20, 2013.(19) Incorporated by reference to the comparable exhibit filed with the Company’s Annual Report on Form 10-K for the year ended December31, 2009.(20) Filed herewith.(*) Denotes Management Compensation Plan, agreement or arrangement. 32Source: HUDSON TECHNOLOGIES INC /NY, 10-K, March 05, 2013Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Hudson Technologies, Inc.Consolidated Financial Statements Contents Report of Independent Registered Public Accounting Firm34Audited Consolidated Financial Statements: ·Consolidated Balance Sheets35·Consolidated Income Statements36·Consolidated Statements of Stockholders' Equity37·Consolidated Statements of Cash Flows38·Notes to the Consolidated Financial Statements39 33Source: HUDSON TECHNOLOGIES INC /NY, 10-K, March 05, 2013Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Report of Independent Registered Public Accounting Firm Board of Directors and Stockholders Hudson Technologies, Inc.Pearl River, NY We have audited the accompanying consolidated balance sheets of Hudson Technologies, Inc. and subsidiaries as of December 31, 2012 and 2011and the related consolidated statements of income, stockholders’ equity, and cash flows for the years then ended. These financial statements are theresponsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standardsrequire that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. TheCompany is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration ofinternal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose ofexpressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit alsoincludes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles usedand significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide areasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of HudsonTechnologies, Inc. as of December 31, 2012 and 2011, and the results of its operations and its cash flows for the years then ended in conformity withaccounting principles generally accepted in the United States of America. /s/ BDO USA, LLPStamford, CTMarch 5, 2013 34Source: HUDSON TECHNOLOGIES INC /NY, 10-K, March 05, 2013Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Hudson Technologies, Inc. and SubsidiariesConsolidated Balance Sheets(Amounts in thousands, except for share and par value amounts) December 31, 2012 2011 Assets Current assets: Cash and cash equivalents $3,991 $3,958 Trade accounts receivable - net 1,956 2,453 Inventories 40,167 17,734 Deferred tax asset 234 0 Prepaid expenses and other current assets 676 611 Total current assets 47,024 24,756 Property, plant and equipment, less accumulated depreciation and amortization 4,765 3,441 Other assets 341 79 Deferred tax asset 3,888 3,086 Investments in affiliates 1,138 0 Intangible assets, less accumulated amortization 76 89 Total Assets $57,232 $31,451 Liabilities and Stockholders' Equity Current liabilities: Accounts payable and accrued expenses $6,219 $5,227 Accrued payroll 661 703 Short-term debt and current maturities of long-term debt 12,736 6,361 Total current liabilities 19,616 12,291 Long-term debt, less current maturities 4,920 121 Total Liabilities 24,536 12,412 Commitments and contingencies Stockholders' equity: Preferred stock, shares authorized 5,000,000: Series A Convertible Preferred stock, $0.01 par value ($100 liquidation preference value); shares authorized150,000; none issued or outstanding 0 0 Common stock, $0.01 par value; shares authorized 50,000,000; issued and outstanding 24,124,625 and23,783,106 241 238 Additional paid-in capital 43,722 42,869 Accumulated deficit (11,267) (24,068)Total Stockholders' Equity 32,696 19,039 Total Liabilities and Stockholders' Equity $57,232 $31,451 See Accompanying Notes to the Consolidated Financial Statements. 35Source: HUDSON TECHNOLOGIES INC /NY, 10-K, March 05, 2013Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Hudson Technologies, Inc. and SubsidiariesConsolidated Income Statements(Amounts in thousands, except for share and per share amounts) For the years ended December 31, 2012 2011 Revenues $56,447 $44,322 Cost of sales 33,905 35,637 Gross Profit 22,542 8,685 Operating expenses: Selling and marketing 2,748 2,153 General and administrative 4,914 4,004 Total operating expenses 7,662 6,157 Operating income 14,880 2,528 Other income (expense): Interest expense (693) (881)Other income 9 21 Total other income (expense) (684) (860) Income before income taxes 14,196 1,668 Income tax expense 1,395 634 Net income $12,801 $1,034 Net income per common share - basic $0.54 $0.04 Net income per common share - diluted $0.49 $0.04 Weighted average number of shares outstanding - basic 23,906,706 23,780,814 Weighted average number of shares outstanding - diluted 26,353,960 24,803,047 See Accompanying Notes to the Consolidated Financial Statements. 36Source: HUDSON TECHNOLOGIES INC /NY, 10-K, March 05, 2013Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Hudson Technologies, Inc. and SubsidiariesConsolidated Statements of Stockholders' Equity (Amounts in thousands, except for share amounts) Common stock Additional Accumulated Shares Amount Paid-in Capital Deficit Total Balance at December 31, 2010 23,780,606 $238 $42,887 $(25,102) $18,023 Repurchase of warrants 0 0 (90) 0 (90) Issuance of common stock upon exercise of stockoptions 2,500 0 3 0 3 Value of share-based arrangements 0 0 69 0 69 Net income 0 0 0 1,034 1,034 Balance at December 31, 2011 23,783,106 238 42,869 (24,068) 19,039 Issuance of common stock in connection with assetpurchase 160,305 1 599 0 600 Issuance of common stock upon exercise of stockoptions and warrants 161,214 2 120 0 122 Issuance of common stock for services 20,000 0 74 0 74 Value of share-based arrangements 0 0 60 0 60 Net income 0 0 0 12,801 12,801 Balance at December 31, 2012 24,124,625 $241 $43,722 $(11,267) $32,696 See Accompanying Notes to the Consolidated Financial Statements. 37Source: HUDSON TECHNOLOGIES INC /NY, 10-K, March 05, 2013Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Hudson Technologies, Inc. and SubsidiariesConsolidated Statements of Cash FlowsIncrease (Decrease) in Cash and Cash Equivalents(Amounts in thousands) For the years ended December 31, 2012 2011 Cash flows from operating activities: Net income $12,801 $1,034 Adjustments to reconcile net income to cash provided (used) by operating activities: Depreciation and amortization 556 497 Allowance for doubtful accounts 29 26 Amortization of deferred finance cost 41 6 Value of share-based payment arrangements 134 69 Deferred tax (benefit) utilization (1,036) 583 Changes in assets and liabilities: Trade accounts receivable 468 (712)Inventories (22,433) 477 Prepaid expenses and other current assets (65) (235)Other assets (303) (19)Accounts payable and accrued expenses 542 (1,113)Cash provided(used) by operating activities (9,266) 613 Cash flows from investing activities: Additions to patents (19) (43)Additions to property, plant, and equipment (1,248) (903)Investment in affiliates (730) 0 Cash used by investing activities (1,997) (946) Cash flows from financing activities: Proceeds from issuance of common stock - net 122 3 Repurchase of warrants 0 (90)Proceeds of short-term debt - net 10,527 1,470 Proceeds from long-term debt 4,387 0 Repayment of long-term debt (3,740) (1,018)Cash provided by financing activities 11,296 365 Increase in cash and cash equivalents 33 32 Cash and cash equivalents at beginning of period 3,958 3,926 Cash and cash equivalents at end of period $3,991 $3,958 Supplemental disclosure of cash flow information: Cash paid during period for interest $652 $862 Cash paid for income taxes $2,553 $59 Non Cash Investing and Finance Securities Investment in affiliates $408 $0 Issuance of common stock in connection with asset purchase $600 $0 See Accompanying Notes to the Consolidated Financial Statements. 38Source: HUDSON TECHNOLOGIES INC /NY, 10-K, March 05, 2013Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Hudson Technologies, Inc. and subsidiariesNotes to the Consolidated Financial Statements Note 1 - Summary of Significant Accounting Policies Business Hudson Technologies, Inc., incorporated under the laws of New York on January 11, 1991, is a refrigerant services company providing innovative solutionsto recurring problems within the refrigeration industry. The Company's products and services are primarily used in commercial air conditioning, industrialprocessing and refrigeration systems, including (i) refrigerant sales, (ii) refrigerant management services consisting primarily of reclamation of refrigerants and(iii) RefrigerantSide® Services performed at a customer's site, consisting of system decontamination to remove moisture, oils and other contaminants. Inaddition, RefrigerantSide® Services include predictive and diagnostic services for industrial and commercial refrigeration applications, which are designed topredict potential catastrophic problems and identify inefficiencies in an operating system. The Company’s Chiller Chemistry®, Chill Smart®, FluidChemistry®, and Performance Optimization are predictive and diagnostic service offerings. As a component of the Company’s products and services, theCompany also participates in the generation of carbon offset projects. The Company operates principally through its wholly-owned subsidiary, HudsonTechnologies Company. Unless the context requires otherwise, references to the “Company”, “Hudson”, “we”, “us”, “our”, or similar pronouns refer toHudson Technologies, Inc. and its subsidiaries. In preparing the accompanying consolidated financial statements, and in accordance with ASC855-10 “Subsequent Events”, the Company’s management hasevaluated subsequent events through the date that the financial statements were filed. In the opinion of management, all estimates and adjustments considered necessary for a fair presentation have been included and all such adjustments werenormal and recurring. Consolidation The consolidated financial statements represent all companies of which Hudson directly or indirectly has majority ownership or otherwise controls. Significantintercompany accounts and transactions have been eliminated. The Company's consolidated financial statements include the accounts of wholly-ownedsubsidiaries Hudson Holdings, Inc. and Hudson Technologies Company. Fair value of financial instruments The carrying values of financial instruments including trade accounts receivable and accounts payable approximate fair value at December 31, 2012 and2011, because of the relatively short maturity of these instruments. The carrying value of short and long-term debt approximates fair value, based upon quotedmarket rates of similar debt issues, as of December 31, 2012 and 2011. Credit risk Financial instruments, which potentially subject the Company to concentrations of credit risk, consist principally of temporary cash investments and tradeaccounts receivable. The Company maintains its temporary cash investments in highly-rated financial institutions and, at times, the balances exceed FDICinsurance coverage. The Company's trade accounts receivables are primarily due from companies throughout the United States. The Company reviews eachcustomer'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 otherinformation. The carrying value of the Company’s accounts receivable is reduced by the established allowance for doubtful accounts. The allowance fordoubtful accounts includes any accounts receivable balances that are determined to be uncollectible, along with a general reserve for the remaining accountsreceivable balances. The Company adjusts its reserves based on factors that affect the collectability of the accounts receivable balances. For the year ended December 31, 2012, two customers each accounted for 10% or more of the Company’s revenues and in the aggregate these two customersaccounted for 28% of the Company’s revenues. At December 31, 2012, there were no outstanding receivables from these customers. For the year endedDecember 31, 2011, no one customer accounted for 10% or more of the Company’s revenues. The loss of a principal customer or a decline in the economic prospects of and/or a reduction in purchases of the Company's products or services by any suchcustomer could have an adverse effect on the Company's future financial position and results of operations. 39Source: HUDSON TECHNOLOGIES INC /NY, 10-K, March 05, 2013Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. 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 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. The cost to complete equipment that is under construction isnot considered to be material to the Company's financial position. 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 orterms of the respective leases. Costs of maintenance and repairs are charged to expense when incurred. 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 and passage of title to customers in accordance with contractual terms. The Companyevaluates each sale to ensure collectability. In addition, each sale is based on an arrangement with the customer and the sales price to the buyer is fixed. Licensefees are recognized over the period of the license based on the respective performance measurements associated with the license. Royalty revenues are recognizedwhen earned. Cost of sales is recorded based on the cost of products shipped or services performed and related direct operating costs of the Company'sfacilities. To the extent that the Company charges its customers shipping fees, such amounts are included as a component of revenue and the correspondingcosts are included as a component of cost of sales. The Company's revenues are derived from refrigerant and reclamation sales and RefrigerantSide® Services, including license and royalty revenues. Therevenues for each of these lines are as follows: Years Ended December 31, 2012 2011 (in thousands) Refrigerant and reclamation sales $52,220 $40,346 RefrigerantSide® Services 4,227 3,976 Total $56,447 $44,322 Income taxes The Company utilizes the asset and liability method for recording deferred income taxes, which provides for the establishment of deferred tax asset or liabilityaccounts based on the difference between tax and financial reporting bases of certain assets and liabilities. The tax benefit associated with the Company's netoperating loss carry forwards (“NOLs”) is recognized to the extent that the Company is expected to recognize future taxable income. The Company assesses therecoverability of its deferred tax assets based on its expectation that it will recognize future taxable income and adjusts its valuation allowance accordingly. Asof December 31, 2012 and 2011, the net deferred tax asset was $4,122,000 and $3,086,000, respectively. Certain states either do not allow or limit NOLs and as such the Company will be liable for certain state taxes. To the extent that the Company utilizes itsNOLs, it will not pay tax on such income but may be subject to the federal alternative minimum tax. In addition, to the extent that the Company’s net income,if any, exceeds the annual NOL limitation it will pay income taxes based on existing statutory rates. Moreover, as a result of a “change in control”, as definedby the Internal Revenue Service, the Company’s ability to utilize its existing NOLs is subject to certain annual limitations. The Company’s NOLs are subjectto annual limitations of $1,300,000. As a result of an Internal Revenue Service audit, the 2006 and prior federal tax years have been closed. The Company operates in many states throughout theUnited States and, as of December 31, 2012, the various states’ statutes of limitations remain open for tax years subsequent to 2008. The Companyrecognizes interest and penalties, if any, relating to income taxes as a component of the provision for income taxes. 40Source: HUDSON TECHNOLOGIES INC /NY, 10-K, March 05, 2013Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. The Company evaluates uncertain tax positions, if any, by determining if it is more likely than not to be sustained upon examination by the taxing authorities.As of December 31, 2012 and 2011, the Company had no uncertain tax positions. Income per common and equivalent shares If dilutive, common equivalent shares (common shares assuming exercise of options and warrants) utilizing the treasury stock method are considered in thepresentation of diluted earnings per share. The reconciliation of shares used to determine net income per share is as follows (dollars in thousands): Years EndedDecember 31, 2012 2011 Net income $12,801 $1,034 Weighted average number of shares – basic 23,906,706 23,780,814 Shares underlying warrants 315,494 10,966 Shares underlying options 2,131,760 1,011,267 Weighted average number of shares outstanding – diluted 26,353,960 24,803,047 During the year ended December 31, 2012 and 2011, certain options and warrants aggregating none and 1,995,000 shares, respectively, have been excludedfrom the calculation of diluted shares, due to the fact that their effect would be anti-dilutive. Estimates and risks The preparation of financial statements in conformity with generally accepted accounting principles in the United States requires management to makeestimates and assumptions that affect reported amounts of certain assets and liabilities, the disclosure of contingent assets and liabilities, and the results ofoperations during the reporting period. Actual results could differ from these estimates. The Company utilizes both internal and external sources to evaluate potential current and future liabilities for various commitments and contingencies. In theevent that the assumptions or conditions change in the future, the estimates could differ from the original estimates. Several of the Company's accounting policies involve significant judgments, uncertainties and estimations. The Company bases its estimates on historicalexperience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for makingjudgments about the carrying values of assets and liabilities. Actual results may differ from these estimates under different assumptions or conditions. To theextent that actual results differ from management's judgments and estimates, there could be a material adverse effect on the Company. On a continuous basis,the Company evaluates its estimates, including, but not limited to, those estimates related to its allowance for doubtful accounts, inventory reserves, andvaluation allowance for the deferred tax assets relating to its NOLs and commitments and contingencies. With respect to accounts receivable, the Companyestimates the necessary allowance for doubtful accounts based on both historical and anticipated trends of payment history and the ability of the customer tofulfill its obligations. For inventory, the Company evaluates both current and anticipated sales prices of its products to determine if a write down of inventoryto net realizable value is necessary. In determining the Company’s valuation allowance for its deferred tax assets, the Company assesses its ability to generatetaxable income in the future. The Company participates in an industry that is highly regulated, changes in which could affect operating results. Currently the Company purchases virgin,hydrochlorofluorocarbon (“HCFC”) and hydrofluorocarbon (“HFC”) refrigerants and reclaimable, primarily HCFC and chlorofluorocarbon (“CFC”),refrigerants from suppliers and its customers. Effective January 1, 1996, the Clean Air Act (the “Act”) prohibited the production of virgin CFC refrigerantsand limited the production of virgin HCFC refrigerants. Effective January 2004, the Act further limited the production of virgin HCFC refrigerants and federalregulations were enacted which established production and consumption allowances for HCFC refrigerants and which imposed limitations on the importationof certain virgin HCFC refrigerants. Additionally, effective January 1, 2010, the Act further limited the production of virgin HCFC refrigerants and additionalfederal regulations were enacted which imposed further limitation and a phase down on the use, production and importation of virgin HCFC refrigerants. As aresult of litigation, the federal regulations implementing the January 2010 phase down schedule have been vacated. Under the Act, production of certain virginHCFC refrigerants is scheduled to be phased out during the period 2010 through 2020, and production of all virgin HCFC refrigerants is scheduled to bephased out by 2030. In January 2012, the Environmental Protection Agency (“EPA”) published a proposed rule, by which the EPA has proposed to furtherreduce the production of HCFC refrigerants when compared to the reductions established in the January 1, 2010 published rule. The reductions proposed bythe EPA in the proposed rule range from 11 to 47 percent from the levels established in the prior rule for calendar years 2012, 2013, and 2014 (the “Period”).To the extent that there is no final rule for the Period, the industry is operating under the direction of “No Action Assurance Letters” issued by the EnforcementDivision of the EPA. For the years ending December 31, 2012 and 2013, the EPA has allowed virgin production or importation of 55 and 39 million pounds,respectively, of HCFC22. The Company believes it is likely that the final rule, which the Company expects to be issued in 2013, will allow for the productionor importation of at least 45 million pounds of HCFC22 in 2013. Once a final rule is released, the number of pounds will be known for the entire Period. 41Source: HUDSON TECHNOLOGIES INC /NY, 10-K, March 05, 2013Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. To the extent that the Company is unable to source sufficient quantities of refrigerants or is unable to obtain refrigerants on commercially reasonable terms orexperiences a decline in demand and/or price 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. The Company is subject to various legal proceedings. The Company assesses the merit and potential liability associated with each of these proceedings. Inaddition, the Company estimates potential liability, if any, related to these matters. To the extent that these estimates are not accurate, or circumstances changein the future, the Company could realize liabilities, which would have a material adverse effect on operating results and its financial position. Impairment of long-lived assets The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not berecoverable. 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 expectedto be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carryingamount 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 tosell. Recent accounting pronouncements In July 2012, the FASB issued ASU 2012-02, Intangibles- Goodwill or Other (Topic 350): Testing Indefinite-Living Tangible Assets for Impairment.ASU 2012-02 simplifies the guidance for testing the decline in the realizable value (impairment) of indefinite-lived intangible assets other than goodwill byallowing an organization the option to first assess qualitative factors to determine whether it is necessary to perform the quantitative impairment test. Anorganization electing to perform a qualitative assessment is no longer required to calculate the fair value of an indefinite- lived intangible asset unless theorganization determines, based on a qualitative assessment, that it is “more likely than not” that the asset is impaired. The amendments in this Update areeffective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012. Early adoption is permitted. The adoption ofASU 2012-02 is not expected to have a material impact on our results of operations or our financial position. ASU 2012-04 contains amendments to clarify the ASC, correctunintended application of guidance, or make minor improvements to the ASC that are not expected to have a significant effect on current accounting practice orcreate a significant administrative cost to most entities. Additionally, the amendments are intended to make the ASC easier to understand and the fair valvemeasurement guidance easier to apply by eliminating inconsistencies and providing needed clarifications. The amendments that do not have transitionguidance were effective upon issuance. The amendments that are subject to the transition guidance will be effective for fiscal periods beginning after December15, 2012. The adoption of ASU 2012-04 is not expected to have a material impact on our results of operations or our financial position. Note 2 - Other income For the year ended December 31, 2012 other income of $9,000 consisted primarily of miscellaneous income. For the year ended December 31, 2011, otherincome of $21,000 consisted of interest income. Note 3 - Income taxes During the year ended December 31, 2012, the Company recognized $5,395,000 in federal and state income tax expense at statutory rates offset by the releaseduring the 4th quarter of 2012 of $4,000,000 of the Company’s deferred tax asset valuation allowance. During the year ended December 31, 2011, theCompany recognized $634,000 in federal and state income tax expense. In future periods, the Company will be subject to federal and state income tax expenseat statutory tax rates. Future usage of the Company’s NOL’s will be subjected to annual limitations of $1,300,000. 42Source: HUDSON TECHNOLOGIES INC /NY, 10-K, March 05, 2013Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. The following summarizes the provision for income taxes: Years Ended December 31, 2012 2011 (in thousands) Current: Federal $1,846 $0 State and local 585 51 2,431 51 Deferred: Federal (927) 522 State and local (109) 61 (1,036) 583 Provision for income taxes $1,395 $634 Reconciliation of the Company's actual tax rate to the U.S. Federal statutory rate is as follows: Years ended December 31, 2012 2011 Income tax rates - Statutory U.S. federal rate 34% 34%- States, net U.S. benefits 4% 4%- Reduction of valuation allowance (28)% 0%Total 10% 38% As of December 31, 2012, the Company had NOL's of approximately $11,000,000 expiring through 2029The Company’s NOL’s are subject to an annuallimitation of $1,300,000. Elements of deferred income tax assets (liabilities) are as follows: December 31, 2012 2011 (in thousands) Deferred tax assets (liabilities) - Depreciation & amortization $(112) $133 - Reserves for doubtful accounts 86 66 - Accrued payroll 0 166 - Inventory reserve 148 137 - NOL 4,000 7,014 Subtotal 4,122 7,516 - Valuation allowance 0 (4,430)Total $4,122 $3,086 The Company considered its projected future taxable income, and associated annual limitations, in determining the amount of deferred tax assets to recognize.The Company believes that given the extended time period that it may recognize its deferred tax assets, it is more likely than not it will realize the benefit ofthese assets prior to their expiration. As of December 31, 2012, there is no further deferred tax asset valuation allowance. Note 4 - Trade accounts receivable - net At December 31, 2012 and 2011, trade accounts receivable are net of reserves for doubtful accounts of $227,000 and $200,000, respectively. 43Source: HUDSON TECHNOLOGIES INC /NY, 10-K, March 05, 2013Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Note 5- Inventories Inventories consist of the following: December 31, 2012 2011 (in thousands) Refrigerant and cylinders $9,893 $5,597 Packaged refrigerants 30,274 12,137 Total $40,167 $17,734 Note 6 - Property, plant, and equipment Elements of property, plant, and equipment are as follows: December 31, 2012 2011 Estimated Lives(in thousands) Property, plant, and equipment - Land $535 $535 - Buildings 830 830 39 years- Building improvements 770 770 39 years- Equipment 8,253 7,312 3-7 years- Equipment under capital lease 231 231 5-7 years- Vehicles 1,212 1,056 5 years- Lab and computer equipment, software 2,017 903 3-5 years- Furniture & fixtures 246 233 7-8 years- Leasehold improvements 40 40 3 years- Equipment under construction 96 609 Subtotal 14,230 12,519 Accumulated depreciation & amortization 9,465 9,078 Total $4,765 $3,441 Depreciation expense for the years ended December 31, 2012 and 2011 were $524,000 and $470,000, respectively. Included in lab and computer equipment is software acquired for EffTec International, Inc. (“EffTec”) for $995,000 of which $600,000 was paid with theissuance of shares of the Company’s common stock. Note 7 - Short-term and long-term debt Elements of short-term and long-term debt are as follows: December 31, 2012 2011 (in thousands) Short-term & long-term debt Short-term debt: - Bank credit line $12,451 $2,843 - Long-term debt: current 285 3,518 Subtotal 12,736 6,361 Long-term debt: - Bank credit line 4,000 2,500 - Building and land mortgage 764 903 - Vehicle and equipment loans 327 114 - Capital lease obligations 114 122 - Less: current maturities (285) (3,518)Subtotal 4,920 121 Total short-term & long-term debt $17,656 $6,482 Bank Credit Line On June 22, 2012, a subsidiary of Hudson entered into a Revolving Credit, Term Loan and Security Agreement (the “PNC Facility”) with PNC Bank,National Association, as agent (“Agent” or “PNC”), and such other lenders as may thereafter become a party to the PNC Facility. Under the terms of the PNCFacility, Hudson could initially borrow up to $27,000,000 consisting of a term loan in the principal amount of $4,000,000 and revolving loans in a maximumamount up to the lesser of $23,000,000 and a borrowing base that is calculated based on the outstanding amount of Hudson’s eligible receivables and eligibleinventory, as described in the PNC Facility. Amounts borrowed under the PNC Facility may be used by Hudson for working capital needs and to reimburseSource: HUDSON TECHNOLOGIES INC /NY, 10-K, March 05, 2013Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.drawings under letters of credit. On the closing date of the PNC Facility, Hudson borrowed $9,548,000 which was used by Hudson to repay all amountsoutstanding under the prior credit facility with Keltic Financial Partners, LP (“Keltic”) and to pay fees and expenses relating to the PNC Facility ofapproximately $245,000 which is being amortized over the life of the loan. At December 31, 2012, total borrowings under the PNC Facility were$16,451,000, and there was $10,357,000 available to borrow under the revolving line of credit. The effective interest rate under the PNC Facility was 4% atDecember 31, 2012. On February 15, 2013 the PNC Facility was amended. As a result of this amendment, Hudson may borrow up to a maximum of$40,000,000 consisting of a term loan in the principal amount of $4,000,000 and revolving loans in a maximum amount up to $36,000,000. 44Source: HUDSON TECHNOLOGIES INC /NY, 10-K, March 05, 2013Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Interest on loans under the PNC Facility is payable in arrears on the first day of each month with respect to loans bearing interest at the domestic rate (as setforth in the PNC Facility) and at the end of each interest period with respect to loans bearing interest at the Eurodollar rate (as set forth in the PNC Facility) or,for Eurodollar rate loans with an interest period in excess of three months, at the earlier of (a) each three months from the commencement of such Eurodollarrate loan or (b) the end of the interest period. Interest charges with respect to loans are computed on the actual principal amount of loans outstanding during themonth at a rate per annum equal to (A) with respect to domestic rate loans, the sum of (i) a rate per annum equal to the higher of (1) the base commerciallending rate of PNC, (2) the federal funds open rate plus .5% and (3) the daily LIBOR plus 1%, plus (ii) .5% and (B) with respect to Eurodollar rate loans,the sum of the Eurodollar rate plus 2.25%. Hudson granted to PNC, for itself, and as agent for such other lenders as may thereafter become a lender under the PNC Facility, a security interest inHudson’s receivables, intellectual property, general intangibles, inventory and certain other assets. The PNC Facility contains certain financial and non-financial covenants relating to Hudson, including limitations on Hudson’s ability to pay dividends oncommon stock or preferred stock, and also includes certain events of default, including payment defaults, breaches of representations and warranties,covenant defaults, cross-defaults to other obligations, events of bankruptcy and insolvency, certain ERISA events, judgments in excess of specified amounts,impairments to guarantees and a change of control. As of December 31, 2012, the Company was in compliance with all covenants in the PNC Facility. The commitments under the PNC Facility will expire and the full outstanding principal amount of the loans, together with accrued and unpaid interest, are dueand payable in full on June 22, 2015, unless the commitments are terminated and the outstanding principal amount of the loans are accelerated soonerfollowing an event of default. Building and Land Mortgage On June 1, 2012, the Company entered into a mortgage note with Busey Bank for $855,000. The note bears interest at the fixed rate of 4% per annum,amortizing over 60 months and maturing on June 1, 2017. The mortgage note is secured by the Company’s land and building located in Champaign, Illinois.At December 31, 2012 the principal balance of this mortgage note was $764,000. Vehicle and Equipment Loans The Company had entered into various vehicle and equipment loans. These loans are payable in 60 monthly payments through March 2017 and bear interestfrom 2.9% to 8.7%. Scheduled maturities of the Company's long-term debt and capital lease obligations are as follows: Years ended December 31, Amount (in thousands) - 2013 $285 - 2014 290 - 2015 4,267 - 2016 257 - 2017 106 Total $5,205 45Source: HUDSON TECHNOLOGIES INC /NY, 10-K, March 05, 2013Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Capital Lease Obligations The Company rents certain equipment with a net book value of approximately $128,000 at December 31, 2012 under leases which have been classified ascapital leases. Scheduled future minimum lease payments under capital leases net of interest are as follows: Years ended December 31, Amount (in thousands) - 2013 $59 - 2014 36 - 2015 22 - 2016 6 123 Less Interest expense (9)Total $114 Note 8 - Stockholders' equity On September 5, 2008, the Company’s shelf registration statement on Form S-3 (the “Shelf Registration”) was declared effective by the SEC. On July 31, 2009, Hudson entered into a Placement Agent Agreement with Roth Capital Partners, (“Roth”), engaging Roth to act as placement agent for aregistered direct offering under the Shelf Registration to sell, on a best efforts basis, 3,870,000 shares of the Company’s common stock at a sale price of $1.15per share (the “2009 Offering”). A closing of the 2009 Offering was held on August 5, 2009, at which time, Hudson sold 1,470,000 shares of its common stock at $1.15 per share andreceived net proceeds of approximately $1,400,000 and no other closings were completed. As placement agent for the 2009 Offering, Roth received $101,000and a warrant to purchase 73,500 shares of common stock at an exercise price of $1.4375 per share, plus reimbursement of its expenses of $56,000. Theestimated fair value of the warrant was approximately $48,000 and such warrant was charged to additional paid-in capital as compensation expense to Roth. On July 7, 2010, the Company sold 2,737,500 units, with the aggregate units consisting of 2,737,500 shares of the Company’s common stock and warrantsto purchase 1,368,750 shares, at a price of $2.00 per unit in a registered direct offering (the “2010 Offering”) pursuant to the Shelf Registration. The warrantsissued as part of the 2010 Offering have an exercise price of $2.60 per share and are exercisable for a five-year period, which commenced on January 7, 2011.The net proceeds pursuant to the 2010 Offering were approximately $4,900,000. The value of the aggregate number of warrants issued pursuant to the 2010Offering was approximately $1,300,000 and such amount was charged as a component of stockholders’ equity to additional paid-in capital. Effective as of March 4, 2011, the Company re-purchased warrants to purchase 150,000 shares of the Company’s common stock, at a price of $0.60 pershare, which warrants were issued in connection with the 2010 Offering. On March 7, 2011, the remaining 1,218,750 warrants issued in connection with the 2010 Offering were amended on consent of the holders of more than two-thirds of the remaining warrants, to among other things, extend the expiration date of the warrants to July 7, 2016. On May 17, 2012, the Company issued 20,000 shares of the Company’s common stock to a certain consultant for services, and the Company recognized$74,000 in general and administrative expenses for this service. In connection with an April 2008 amendment of the Company’s prior credit facility with Keltic, the Company issued an aggregate of 100,000 five-yearcommon stock purchase warrants exercisable at $1.88 per share (the “Keltic Warrants”). On August 3, 2012, the Company issued 53,140 shares of commonstock upon the cashless exercise of the Keltic Warrants based upon a fair market valuation of $ 4.012 per share on the exercise date (as calculated under thewarrants). The Company did not receive any cash proceeds upon the exercise of the Keltic Warrants. On November 9, 2012, the Company issued 133,589 shares of the Company’s common stock, at a price of $3.743 per share, to EffTec, in connection withthe Company’s purchase from EffTec’s subsidiary of its proprietary Efftrack™ software. The Company also issued 26,716 shares of its common stock, ata price of $3.743 per share, to Scott Macon, Ltd in payment for services it performed as the Company’s advisor in the EffTec Transaction. 46Source: HUDSON TECHNOLOGIES INC /NY, 10-K, March 05, 2013Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Note 9 - Commitments and contingencies Rents and operating leases Hudson utilizes leased facilities and operates equipment under non-cancelable operating leases through March 1, 2013 as follows: Properties Location Annual Rent Lease Expiration DateAuburn, Washington $25,000 Month to MonthBaton Rouge, Louisiana $27,000 Month to MonthChampaign, Illinois $258,000 12/2014Charlotte, North Carolina $61,000 3/2016Hampstead, New Hampshire $24,000 8/2017Pearl River, New York $105,000 8/2018Pottsboro, Texas $18,000 8/2014Stony Point, NY $106,000 6/2016Tulsa, Oklahoma $26,000 12/2014 The Company rents properties and various equipment under operating leases. Rent expense for the years ended December 31, 2012 and 2011 totaledapproximately $650,000 and $601,000, respectively. In addition to the properties above, the Company does at times utilize public warehouse space on amonth to month basis. The Company typically enters into short-term leases for the facilities and wherever possible extends the expiration date of such leases. Future commitments under operating leases are summarized as follows: Years ended December 31, Amount (in thousands) - 2013 $668 - 2014 537 - 2015 238 - 2016 181 - 2017 194 Total $1,818 Legal Proceedings On April 1, 1999, the Company reported a release of approximately 7,800 lbs. of R-11 refrigerant (the “1999 Release”), at its former leased facility inHillburn, NY (the “Hillburn Facility”), which the Company vacated in June 2006. A failed hose connection to one of the Company's outdoor storage tanksallowed liquid R-11 refrigerant (“R-11”) to discharge from the tank into the concrete secondary containment area in which the subject tank was located. Between April 1999 and May 1999, with the approval of the New York State Department of Environmental Conservation (“DEC”), the Companyconstructed and put into operation a remediation system to remove R-11 levels in the groundwater under and around the Hillburn Facility. In September 2000, the Company signed an Order on Consent with the DEC, which was amended in May 2001, whereby the Company agreed to operate theremediation system and perform monthly testing at the Hillburn Facility until remaining groundwater contamination has been effectively abated. In July 2005,the DEC approved a modification of the Order on Consent to reduce the frequency of testing from monthly to quarterly. The Company is continuing to operatethe remediation system pursuant to the approved modifications to that Order on Consent. In December 2012, the Company met with representatives of theDEC and has proposed further modifications to the Order of Consent to further reduce the frequency and scope of testing, and expects to finalize thesemodifications during the first half of 2013. Based upon the Company’s recent discussions with the DEC, as of December 31, 2012, the Company accrued, asan expense in its consolidated financial statements, the costs that the Company believes it will incur in connection with its compliance with the Order ofConsent through December 31, 2017. There can be no assurance that additional testing will not be required or that the Company will not incur additional costsand such costs in excess of the Company’s estimate may have a material adverse effect on the Company financial condition or results of operations. 47Source: HUDSON TECHNOLOGIES INC /NY, 10-K, March 05, 2013Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. In May 2000, the Hillburn Facility, as a result of the 1999 Release, was nominated by the United States Environmental Protection Agency (“EPA”) for listingon the National Priorities List (“NPL”) pursuant to the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (“CERCLA”). TheCompany submitted opposition to the listing within the sixty-day comment period. In September 2003, the EPA advised the Company that it has no currentplans to finalize the process for listing of the Hillburn Facility on the NPL and that the EPA will not withdraw the proposal for listing on the NPL. The Company has exhausted all insurance proceeds available for the 1999 Release under all applicable policies. During the years ended December 31, 2012 and 2011, the Company incurred $102,000 and $86,000, respectively, in additional remediation costs inconnection with the matters above. There can be no assurance that the ultimate outcome of the 1999 Release will not have a material adverse effect on theCompany's financial condition and results of operations. There can be no assurance that the EPA will not change its current plans and seek to finalize theprocess of listing the Hillburn Facility on the NPL, or that the ultimate outcome of such a listing will not have a material adverse effect on the Company'sfinancial condition and results of operations. Employment Agreement The Company has entered into a two-year employment agreement with Kevin J. Zugibe, which currently expires in October 2014 and is automaticallyrenewable for successive two-year terms unless either party gives notice of termination at least ninety days prior to the then expiration date of the then currentterm. Pursuant to the agreement, Mr. Zugibe is receiving an annual base salary of $288,500 with such increases and bonuses as the Company’s Board ofDirectors may determine. The Company is the beneficiary of a "key-man" insurance policy on the life of Mr. Zugibe in the amount of $1,000,000. Note 10 - Share-Based compensation Share-based compensation represents the cost related to share-based awards, typically stock options, granted to employees, non-employees, officers anddirectors. Share-based compensation is measured at grant date, based on the estimated aggregate fair value of the award on the grant date, and such amount ischarged to compensation expense on a straight-line basis (net of estimated forfeitures) over the requisite service period. For the years ended December 31, 2012and 2011, the share-based compensation expense of $134,000 and $69,000, respectively, is reflected in general and administrative expenses in theconsolidated income statements. Share-based awards have historically been stock options issued pursuant to the terms of the Company’s 1994 and 1997 stock option plans and theCompany’s 2004 and 2008 stock incentive plans, (collectively, the “Plans”), described below. The Plans may be administered by the Board of Directors or theCompensation and Stock Option Committee of the Board or by another committee appointed by the Board from among its members as provided in the Plans.Presently, the Plans are administered by the Company’s Compensation/Stock Option Committee of the Board of Directors. As of December 31, 2012, thePlans authorized the issuance of stock options to purchase 5,500,000 shares of the Company’s common stock and, as of December 31, 2012 there were2,636,470 shares of the Company’s common stock available for issuance for future stock option grants or other stock based awards. Stock option awards, which allow the recipient to purchase shares of the Company’s common stock at a fixed price, are typically granted at an exercise priceequal to the Company’s stock price at the date of grant. Typically, the Company’s stock option awards have generally vested from immediately to two yearsfrom the grant date and have had a contractual term ranging from five to ten years For the years ended December 31, 2012 and 2011, the Company issued 30,843 and 75,000 options, respectively. As of December 31, 2012, there was nounrecognized compensation cost related to non-vested previously granted option awards. Effective October 31, 1994, the Company adopted an Employee Stock Option Plan (“1994 Plan”) pursuant to which 725,000 shares of common stock werereserved for issuance upon the exercise of options designated as either (i) options intended to constitute incentive stock options (“ISOs”) under the InternalRevenue Code of 1986, as amended (“Code”), or (ii) nonqualified options. ISOs could be granted under the 1994 Plan to employees and officers of theCompany. Non-qualified options could be granted to consultants, directors (whether or not they are employees), employees or officers of the Company.Effective November 1, 2004, the Company’s ability to grant options under the 1994 Plan expired. Effective July 25, 1997, the Company adopted its 1997 Employee Stock Option Plan, which was amended on August 19, 1999, (“1997 Plan”) pursuantto which 2,000,000 shares of common stock were reserved for issuance upon the exercise of options designated as either (i) ISOs under the Code, or (ii)nonqualified options. ISOs could be granted under the 1997 Plan to employees and officers of the Company. Non-qualified options could be granted toconsultants, directors (whether or not they are employees), employees or officers of the Company. Stock appreciation rights could also be issued in tandemwith stock options. Effective June 11, 2007, the Company’s ability to grant options or stock appreciation rights under the 1997 Plan expired. 48Source: HUDSON TECHNOLOGIES INC /NY, 10-K, March 05, 2013Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Effective September 10, 2004, the Company adopted its 2004 Stock Incentive Plan (“2004 Plan”) pursuant to which 2,500,000 shares of common stock werereserved for issuance upon the exercise of options, designated as either (i) ISOs under the Code, or (ii) nonqualified options, restricted stock, deferred stock orother stock-based awards. ISOs may be granted under the 2004 Plan to employees and officers of the Company. Non qualified options, restricted stock,deferred stock or other stock-based awards may be granted to consultants, directors (whether or not they are employees), employees or officers of theCompany. Stock appreciation rights may also be issued in tandem with stock options. Unless the 2004 Plan is sooner terminated, the ability to grant optionsor other awards under the 2004 Plan will expire on September 10, 2014. ISOs granted under the 2004 Plan may not be granted at a price less than the fair market value of the common stock on the date of grant (or 110% of fairmarket value in the case of persons holding 10% or more of the voting stock of the Company). Nonqualified options granted under the 2004 Plan may not begranted at a price less than the fair market value of the common stock. Options granted under the 2004 Plan expire not more than ten years from the date ofgrant (five years in the case of ISOs granted to persons holding 10% or more of the voting stock of the Company). Effective August 27, 2008, the Company adopted its 2008 Stock Incentive Plan (“2008 Plan”) pursuant to which 3,000,000 shares of common stock werereserved for issuance upon the exercise of options, designated as either (i) ISOs under the Code, or (ii) nonqualified options, restricted stock, deferred stock orother stock-based awards. ISOs may be granted under the 2008 Plan to employees and officers of the Company. Non qualified options, restricted stock,deferred stock or other stock-based awards may be granted to consultants, directors (whether or not they are employees), employees or officers of theCompany. Stock appreciation rights may also be issued in tandem with stock options. Unless the 2008 Plan is sooner terminated, the ability to grant optionsor other awards under the 2008 Plan will expire on August 27, 2018. ISOs granted under the 2008 Plan may not be granted at a price less than the fair market value of the common stock on the date of grant (or 110% of fairmarket value in the case of persons holding 10% or more of the voting stock of the Company). Nonqualified options granted under the 2008 Plan may not begranted at a price less than the fair market value of the common stock. Options granted under the 2008 Plan expire not more than ten years from the date ofgrant (five years in the case of ISOs granted to persons holding 10% or more of the voting stock of the Company). All stock options have been granted to employees and non-employees at exercise prices equal to or in excess of the market value on the date of the grant. The Company determines the fair value of share based awards at the grant date by using the Black-Scholes option-pricing model, and is incorporating thesimplified method to compute expected lives of share based awards with the following weighted-average assumptions: Years Ended December 31, 2012 2011 Assumptions Dividend yield 0% 0%Risk free interest rate 1.0% 1.0%Expected volatility 73% 63%Expected lives 5 years 5 years A summary of the status of the Company's Plans as of December 31, 2012 and 2011 and changes for the periods ending on those dates is presented below:Stock Option Plan Totals Shares WeightedAverageExercise Price Outstanding at December 31, 2010 3,411,943 $1.23 · Cancelled (49,000) $2.04 · Exercised (2,500) $1.12 · Granted 75,000 $1.31 Outstanding at December 31, 2011 3,435,443 $1.22 · Cancelled (8,313) $1.10 · Exercised (109,038) $1.42 · Granted 30,843 $3.27 Outstanding at December 31, 2012 3,348,935 $1.23 49Source: HUDSON TECHNOLOGIES INC /NY, 10-K, March 05, 2013Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. The following is the weighted average contractual life in years and the weighted average exercise price at December 31, 2012 of: Weighted Average Number of Remaining Weighted Average Options Contractual Life Exercise Price Options outstanding 3,348,935 4.8 years $1.23 Options vested 3,348,935 4.8 years $1.23 The following is the intrinsic value at December 31, 2012 of: Options outstanding $8,062,564 Options vested in 2012 $29,862 Options exercised in 2012 $267,000 The intrinsic value of options exercised during the year ended December 31, 2011 was $1,000. The following is the weighted average fair value for the twelve month period ended December 31, 2012 of: Options granted $3.27 Options vested $2.86 Note 11- Investment In Affiliates In July 2011, the Company entered into a joint venture agreement with Safety Hi-Tech S.r.l (“SHT”) and with the principals of Banini-Binotti Associates(“BB”). The joint venture has created a new entity know as Hudson Technologies Europe, S.r.l. (“HTE”). The Company and SHT each own 40% of HTEwith BB owning the remaining 20%. HTE’s purpose is to develop a business that provides for refrigerant reclamation, RefrigerantSide® services and energyoptimization services throughout most of Europe, the Middle East and North Africa. As of December 31, 2012, the joint venture has begun limited operations.The Company intends to, over time, have each of its offerings that are available in the US made available in each of these geographies through the operationsof HTE. As of December 31, 2012, the Company has made an initial investment of $516,000, of which $408,000 represents equipment purchased in prioryears, and once the results of operations are deemed material, the Company’s share of the joint venture will be recorded under the equity method. In August 2012, the Company entered into a joint venture agreement with SHT. The joint venture has created a new entity known as Safety Hi-Tech USA,LLC (“USA”). The Company and SHT each own 50% of USA. USA’s purpose is to develop a business that provides fire suppression and suppressantsthroughout North America and Mexico. As of December 31, 2012, the Company has made and investment of $622,000. As of December 31, 2012, the jointventure has not started operations. 50Source: HUDSON TECHNOLOGIES INC /NY, 10-K, March 05, 2013Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. SIGNATURES Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange Act of 1934, the registrant caused this report to be signed on its behalf by theundersigned, thereunto duly authorized. HUDSON TECHNOLOGIES, INC. By:/s/ Kevin J. Zugibe Kevin J. Zugibe, Chairman and Chief Executive Officer Date:March 5, 2013 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant andin the capacities and on the dates indicated. Signature Title Date /s/ Kevin J. Zugibe Chairman of the Board and Chief Executive Officer (Principal March 5, 2013Kevin J. Zugibe Executive Officer) /s/ James R. Buscemi Chief Financial Officer (Principal Financial and Accounting March 5 2013James R. Buscemi Officer) /s/ Vincent P. Abbatecola Director March 5, 2013Vincent P. Abbatecola /s/ Brian F. Coleman Director and President and Chief Operating Officer March 5, 2013Brian F. Coleman /s/ Dominic J. Monetta Director March 5, 2013Dominic J. Monetta /s/ Otto C. Morch Director March 5, 2013Otto C. Morch 51Source: HUDSON TECHNOLOGIES INC /NY, 10-K, March 05, 2013Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Index to Exhibits ExhibitNumber Description Exhibits3.1 Certificate of Incorporation and Amendment. (1)3.2 Amendment to Certificate of Incorporation, dated July 20, 1994. (1)3.3 Amendment to Certificate of Incorporation, dated October 26, 1994. (1)3.4 Certificate of Amendment of the Certificate of Incorporation dated March 16, 1999. (2)3.5 Certificate of Correction of the Certificate of Amendment dated March 25, 1999. (2)3.6 Certificate of Amendment of the Certificate of Incorporation dated March 29, 1999. (2)3.7 Certificate of Amendment of the Certificate of Incorporation dated February 16, 2001. (4)3.8 Certificate of Amendment of the Certificate of Incorporation of Hudson Technologies, Inc., dated March 20, 2002. (5)3.9 Amendment to Certificate of Incorporation dated January 3, 2003. (6)3.10 Amended and Restated By-Laws adopted July 29, 2011. (15)10.1 Assignment of patent rights from Kevin J. Zugibe to Registrant. (1)10.2 1997 Stock Option Plan of the Company, as amended. (3) *10.3 1994 Stock Option Plan of the Company. (1)*10.4 2004 Stock Incentive Plan. (10)*10.5 Form of Incentive Stock Option Agreement under the 2004 Stock Incentive Plan of the Company with full vesting upon issuance. (7)10.6 Form of Incentive Stock Option Agreement under the 2004 Stock Incentive Plan of the Company with options vesting in equal quarterlyinstallments over two year period. (7)10.7 Form of Non-Incentive Stock Option Agreement under the 2004 Stock Incentive Plan of the Company with full vesting upon issuance. (7)10.8 Commercial Mortgage, dated May 27, 2005, between Hudson Technologies Company and Busey Bank. (8)10.9 Commercial Installment Mortgage Note, dated May 27, 2005, between Hudson Technologies Company and Busey Bank. (8)10.10 Amended and Restated Employment Agreement with Kevin J. Zugibe, as amended. (12)*10.11 Agreement with Brian F. Coleman, as amended. (12)*10.12 Agreement with James R. Buscemi, as amended. (12)*10.13 Agreement with Charles F. Harkins, as amended. (12)*10.14 Agreement with Stephen P. Mandracchia, as amended. (12)*10.15 2008 Stock Incentive Plan. (11)10.16 Form of Incentive Stock Option Agreement under the 2008 Stock Incentive Plan with full vesting upon issuance. (12)10.17 Form of Incentive Stock Option Agreement under the 2008 Stock Incentive Plan with options vesting in equal installments over two yearperiod. (12)10.18 Form of Non-Incentive Stock Option Agreement under the 2008 Stock Incentive Plan with full vesting upon issuance. (12)10.19 Form of Non-Incentive Stock Option Agreement under the 2008 Stock Incentive Plan with options vesting in equal installments over twoyear period. (12)10.20 Warrant, dated August 5, 2009, for 73,500 shares of Common Stock issued to Roth Capital Partners, LLC. (19)10.21 First Amendment to Amended and Restated Employment Agreement with Kevin J. Zugibe, dated December 30, 2008. (12)*10.22 Form of Warrant issued in the 2010 Offering. (13)10.23 Warrant Repurchase Agreement dated March 4, 2011 between the Company and Sonar Partners Fund, L.P. (14)10.24 Warrant Repurchase Agreement dated March 4, 2011 between the Company and Sonar Overseas Fund, Ltd. (14)10.25 Form of Agreement and Consent, to amend warrants issued in connection with the 2010 Offering, dated March 7, 2011. (14)10.26 Revolving Credit, Term Loan and Security Agreement, dated June 22, 2012, between Hudson Technologies Company as borrower andPNC Bank, National Association as lender and agent (16)10.27 $23,000,000 Revolving Credit Note, dated June 22, 2012, by Hudson Technologies Company as borrower in favor of PNC (16) 10.28 $4,000,000 Term Note, dated June 22.2012, by Hudson Technologies Company as borrower in favor of PNC. (16) 52Source: HUDSON TECHNOLOGIES INC /NY, 10-K, March 05, 2013Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. 10.29 Guaranty & Suretyship Agreement, dated June 22, 2012, made by Hudson Holdings, Inc. as guarantor on behalf of Hudson TechnologiesCompany. (16)10.30 Guaranty & Suretyship Agreement, dated June 22, 2012, made by the Company as guarantor on behalf of Hudson TechnologiesCompany. (16)10.31 Patent, Trademarks, and Copyrights Security Agreement, dated June 22, 2012, between the Company and PNC. (16)10.32 Patent, Trademarks, and Copyrights Security Agreement, dated June 22, 2012, between Hudson Technologies Company and PNC. (16)10.33 Long Term Care Insurance Plan Summary. (17)*10.34 First Amendment to Revolving Credit, Term Loan, and Security Agreement between Hudson Technologies Company and PNC datedFebruary 15, 2013. (18)10.35 $36,000,000 Amended and Restated Revolving Credit Note, dated February 15, 2013, by Hudson Technologies Company as borrower infavor of PNC. (18)10.36 Guarantors’ Ratification dated February 15, 2013, by the Company and Hudson Holdings, Inc. (18)14 Code of Business Conduct and Ethics. (9)21 Subsidiaries of the Company. (20)23.1 Consent of BDO USA, LLP. (20)31.1 Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (20)31.2 Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (20)32.1 Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of Sarbanes-OxleyAct of 2002. (20)32.2 Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of Sarbanes-OxleyAct of 2002. (20)101 Interactive data file pursuant to Rule 405 of Regulation S-T. (20)______ (1) Incorporated by reference to the comparable exhibit filed with the Company's Registration Statement on Form SB-2 (No. 33-80279-NY).(2) Incorporated by reference to the comparable exhibit filed with the Company's Quarterly Report on Form 10-QSB for the quarter ended June30, 1999.(3) Incorporated by reference to the comparable exhibit filed with the Company's Annual Report on Form 10-KSB for the year ended December31, 1999.(4) Incorporated by reference to the comparable exhibit filed with the Company's Annual Report on Form 10-KSB for the year ended December31, 2000.(5) Incorporated by reference to the comparable exhibit filed with the Company’s Annual Report on Form 10-KSB for the year ended December31, 2001.(6) Incorporated by reference to the comparable exhibit filed with the Company's Annual Report on Form 10-KSB for the year ended December31, 2002.(7) Incorporated by reference to the comparable exhibit filed with the Company’s Annual Report on Form 10-KSB for the year ended December31, 2004.(8) Incorporated by reference to the comparable exhibit filed with the Company’s Quarterly Report on Form 10-QSB for the quarter ended June30, 2005.(9) Incorporated by reference to the comparable exhibit filed with the Company’s Current Report on Form 8-K, for the event dated March 3,2005, and filed May 31, 2005.(10) Incorporated by reference to Appendix B to the Company’s Definitive Proxy Statement on Schedule 14A filed August 18, 2004.(11) Incorporated by reference to Appendix I to the Company’s Definitive Proxy Statement on Schedule 14A filed July 29, 2008.(12) Incorporated by reference to the comparable exhibit filed with the Company’s Annual Report on Form 10-K for the year ended December 31,2008.(13) Incorporated by reference to the comparable exhibit filed with the Company’s Current Report on Form 8-K for the event dated July 1, 2010and filed July 2, 2010.(14) Incorporated by reference to the comparable exhibit filed with the Company’s Annual Report on Form 10-K for the year ended December 31,2010.(15) Incorporated by reference to the comparable exhibit filed with the Company’s Quarterly Report on Form-10-Q for the quarter ended June 30,2011.(16) Incorporated by reference to the comparable exhibit filed with the Company’s Report on Form 8-K for the event dated June 22, 2012 andfiled June 28, 2012. 53Source: HUDSON TECHNOLOGIES INC /NY, 10-K, March 05, 2013Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. (17) Incorporated by reference to the comparable exhibit filed with the Company’s Quarterly Report on Form 10-Q for the quarter endedSeptember 30, 2012.(18) Incorporated by reference to the comparable exhibit filed with the Company’s Current Report on Form 8-K for the event dated February 15,2013 and filed February 20, 2013.(19) Incorporated by reference to the comparable exhibit filed with the Company’s Annual Report on Form 10-K for the year ended December 31,2009.(20) Filed herewith.(*) Denotes Management Compensation Plan, agreement or arrangement. 54 Source: HUDSON TECHNOLOGIES INC /NY, 10-K, March 05, 2013Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Exhibit 21: Subsidiaries of the Registrant Hudson Technologies Company d/b/a Hudson Technologies of Tennessee incorporated in the State of Tennessee Hudson Holdings, Inc. incorporated in the State of Nevada Hudson Technologies Europe, S.r.l., an Italian company, of which the Registrant owns 40% of the equity Safety Hi-Tech USA, LLC, a Delaware limited liability company, of which Hudson Holdings, Inc. owns 50% of the equity. Source: HUDSON TECHNOLOGIES INC /NY, 10-K, March 05, 2013Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Exhibit 23.1: Consent of Independent Registered Public Accounting Firm Hudson Technologies, Inc.Pearl River, New York We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (No. 333-17133, No. 333-38598, No. 333-129057 and No.333-164650) and Registration Statements on Form S-3 (No. 333-182526 and No. 333-185490) of Hudson Technologies, Inc. of our report dated March 5,2013 relating to the consolidated financial statements, which appears in this Form 10-K. /s/ BDO USA, LLP Stamford, CTMarch 5, 2013 Source: HUDSON TECHNOLOGIES INC /NY, 10-K, March 05, 2013Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Exhibit 31.1: Hudson Technologies, Inc.Certification of Principal Executive Officer I, Kevin J. Zugibe, certify that: 1.I have reviewed this annual report on Form 10-K of Hudson Technologies, Inc.; 2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by thisreport; 3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under oursupervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us byothers within those entities, particularly during the period in which this report is being prepared; b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles; c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s mostrecent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likelyto materially affect, the registrant’s internal control over financial reporting; and 5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which arereasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internalcontrol over financial reporting. Date:March 5, 2013 /s/ Kevin J. Zugibe Kevin J. Zugibe Chief Executive Officer and Chairman of the Board Source: HUDSON TECHNOLOGIES INC /NY, 10-K, March 05, 2013Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Exhibit 31.2: Hudson Technologies, Inc.Certification of Principal Financial Officer I, James R. Buscemi, certify that: 1.I have reviewed this annual report on Form 10-K of Hudson Technologies, Inc.; 2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by thisreport; 3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e)) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under oursupervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us byothers within those entities, particularly during the period in which this report is being prepared; b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles; c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s mostrecent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likelyto materially affect, the registrant’s internal control over financial reporting; and 5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which arereasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internalcontrol over financial reporting. Date:March 5, 2013 /s/ James R. Buscemi James R. Buscemi Chief Financial Officer Source: HUDSON TECHNOLOGIES INC /NY, 10-K, March 05, 2013Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Exhibit 32.1: CERTIFICATION PURSUANT TO18 U.S.C. SECTION 1350,AS ADOPTED PURSUANT TOSECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Annual Report of Hudson Technologies, Inc. (the “Company”) on Form 10-K for the period ended December 31, 2012 as filed with theSecurities and Exchange Commission on the date hereof (the “Report”),I, Kevin J. Zugibe, as Chief Executive Officer and Chairman of the Board of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuantto Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge: (1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of theCompany. /s/ Kevin J. Zugibe Kevin J. Zugibe Chief Executive Officer and Chairman of the Board March 5, 2013 Source: HUDSON TECHNOLOGIES INC /NY, 10-K, March 05, 2013Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Exhibit 32.2 CERTIFICATION PURSUANT TO18 U.S.C. SECTION 1350,AS ADOPTED PURSUANT TOSECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Annual Report of Hudson Technologies, Inc. (the “Company”) on Form 10-K for the period endedDecember 31, 2012 as filed with the Securities and Exchange Commission on the date hereof (the “Report”),I, James R. Buscemi, as Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of theSarbanes-Oxley Act of 2002, that, to the best of my knowledge: (1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of theCompany. /s/ James R. Buscemi James R. Buscemi Chief Financial Officer March 5, 2013 Source: HUDSON TECHNOLOGIES INC /NY, 10-K, March 05, 2013Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Source: HUDSON TECHNOLOGIES INC /NY, 10-K, March 05, 2013Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.

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