Hudson
Annual Report 2013

Plain-text annual report

Morningstar® Document Research℠ FORM 10-KHUDSON TECHNOLOGIES INC /NY - HDSNFiled: February 28, 2014 (period: December 31, 2013)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, 2013 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 Registered Common 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 Actof 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has beensubject to such filing requirements for 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 DataFile required to be 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 the registrant 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 becontained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form10-K or any amendment to this Form 10-K. ¨¨ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reportingcompany. See the definitions of “large accelerated filer”, “accelerated filer”, and “smaller reporting company” in Rule12b-2 of the ExchangeAct. Large accelerated filer ¨ Accelerated filer ¨ Non-accelerated filer ¨ (Do not check if a smaller reporting company) Smaller reporting company x 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, 2013 was approximately $59,327,565. As ofFebruary 28, 2014 there were 25,090,386 shares of the registrant’s common stock outstanding. Source: HUDSON TECHNOLOGIES INC /NY, 10-K, February 28, 2014Powered 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, February 28, 2014Powered 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 Part Item Page Part I. Item 1 - Business 3 Item 1A - Risk Factors 8 Item 1B - Unresolved Staff Comments 11 Item 2 - Properties 11 Item 3 - Legal Proceedings 12 Item 4 - Mine Safety Disclosures 12 Part II. Item 5 - Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of EquitySecurities 13 Item 6 - Selected Financial Data 13 Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations 13 Item 7A - Quantitative and Qualitative Disclosures About Market Risk 19 Item 8 - Financial Statements and Supplementary Data 19 Item 9 - Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 19 Item 9A - Controls and Procedures 19 Item 9B - Other Information 20 Part III. Item 10 - Directors, Executive Officers and Corporate Governance 21 Item 11 - Executive Compensation 23 Item 12 - Security Ownership of Certain Beneficial Owners and Management and Related StockholderMatters 27 Item 13 - Certain Relationships and Related Transactions, and Director Independence 29 Item 14 - Principal Accounting Fees and Services 30Part IV. Item 15 - Exhibits, Financial Statement Schedules 31 Signatures 53 2Source: HUDSON TECHNOLOGIES INC /NY, 10-K, February 28, 2014Powered 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 providinginnovative solutions to recurring problems within the refrigeration industry. The Company's products and services are primarily used incommercial air conditioning, industrial processing and refrigeration systems, and include (i) refrigerant sales, (ii) refrigerant managementservices consisting primarily of reclamation of refrigerants and (iii) RefrigerantSide® Services performed at a customer's site, consisting ofsystem decontamination to remove moisture, oils and other contaminants. In addition, RefrigerantSide® Services include predictive anddiagnostic services for industrial and commercial refrigeration applications, which are designed to predict potential catastrophic problems andidentify inefficiencies in an operating system. The Company’s Chiller Chemistry®, Chill Smart®, Fluid Chemistry® and PerformanceOptimization are predictive and diagnostic service offerings. As a component of the Company’s products and services, the Company alsoparticipates 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”, or similar 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 Company participates in an industry that is highly regulated, and changes in the regulations affecting our business could affect ouroperating results. Currently the Company purchases virgin, hydro chlorofluorocarbon (“HCFC”) and hydro fluorocarbon (“HFC”) refrigerantsand reclaimable, primarily HCFC and chlorofluorocarbon (“CFC”), refrigerants from suppliers and its customers. Effective January 1, 1996,the Clean Air Act, as amended (the “Act”) prohibited the production of virgin CFC refrigerants and limited the production of virgin HCFCrefrigerants. Effective January 2004, the Act further limited the production of virgin HCFC refrigerants and federal regulations were enactedwhich established production and consumption allowances for HCFC refrigerants and which imposed limitations on the importation ofcertain virgin HCFC refrigerants. Under the Act, production of certain virgin HCFC refrigerants is scheduled to be phased out during theperiod 2010 through 2020, and production of all virgin HCFC refrigerants is scheduled to be phased out by 2030. Additionally, effectiveJanuary 1, 2010, the Act further limited the production of virgin HCFC refrigerants and, in December 2009, the Environmental ProtectionAgency (“EPA”) published a final rule (the “2009 Rule”) which limited the total pounds of virgin HCFC refrigerants that could be produced andimported for the years 2010 through 2014 to levels which, based upon the EPA’s estimates, would require as much as 20% of the servicedemand for existing equipment to be met by reclaimed or recycled HCFC refrigerants. As a result of litigation, the 2009 Rule was vacated,and in April 2013, the EPA issued a final rule providing for further reductions in the production and importation of HCFC refrigerants in theyears 2013 and 2014 when compared to the reductions originally established in the 2009 Rule (the “April 2013 Rule”). In December 2013,a proposed rule was issued by the EPA to address production and consumption allowances for HCFC refrigerants for the years 2015 through2019. A final rule to address production and consumption allowances for the years 2015 through 2019 has not yet been issued by the EPA.See “Recent Developments.” Under the Act, production of certain virgin HCFC refrigerants is scheduled to be phased out by the year 2020,and production of all HCFC refrigerants is scheduled to be phased out by 2030. HFC refrigerants are used as substitutes for CFC and HCFC refrigerants in certain applications. As a result of the increasing restrictions andlimitations on the production and use of CFC and HCFC refrigerants, various segments of the air conditioning and refrigeration industryhave been replacing or modifying equipment that utilize CFC and HCFC refrigerants and have been transitioning to equipment that utilizeHFC refrigerants and a certain type of HFC’s known as hydrofluoro-olefins (“HFO”). HFC refrigerants are not ozone depleting chemicals andare not currently regulated under the Act. However, certain HFC refrigerants are highly weighted greenhouse gases that are believed tocontribute to global warming and climate change and, as a result, are now subject to various state and federal regulations relating to the sale,use and emissions of HFC refrigerants. In addition, federal legislation has been proposed that, if enacted, would impose limitations on theproduction and importation of certain virgin HFC refrigerants. The Company expects that HFC refrigerants eventually will be replaced byHFOs 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 airconditioning and refrigeration industry, which are intended to minimize the release of refrigerants into the atmosphere and encourage therecovery and re-use of refrigerants. In addition to prohibiting the venting of CFC and HCFC refrigerants, and prohibiting and/or phasing downthe production of CFC and HCFC refrigerants, the Act mandates the recovery of these refrigerants and also promotes and encourages re-useand reclamation of CFC and HCFC refrigerants. Under the Act, owners, operators and companies servicing cooling equipment areresponsible for the integrity of the systems regardless of the refrigerant being used. 3Source: HUDSON TECHNOLOGIES INC /NY, 10-K, February 28, 2014Powered 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 designedto recover and reuse refrigerants, thereby protecting the environment from release to the atmosphere and the corresponding ozone depletionand global warming impact. The reclamation process allows the refrigerant to be re-used thereby eliminating the need to destroy ormanufacture additional refrigerant and eliminating the corresponding impact to the environment associated with the destruction andmanufacturing. The Company believes it is the largest refrigerant reclaimer in the United States. Additionally, the Company has createdalternative solutions to reactive and preventative maintenance procedures that are performed on commercial and industrial refrigerationsystems. These services, known as RefrigerantSide® Services, complement the Company’s refrigerant sales and refrigerant reclamationand management services. The Company has also developed Performance Optimization services that identify inefficiencies in the operationof air conditioning and refrigeration systems and assists companies to improve the efficiency of their systems and save energy. In addition,the Company is pursuing potential opportunities for the creation and monetization of verified emission reductions. See “Carbon OffsetProjects”. Refrigerant Sales The Company sells reclaimed and virgin (new) refrigerants to a variety of customers in various segments of the air conditioning andrefrigeration industry. The Company continues to sell reclaimed CFC based refrigerants, which are no longer manufactured. Virgin, non-CFC refrigerants, including HCFC and HFC refrigerants, are purchased by the Company from several suppliers and resold by theCompany, typically at wholesale. Additionally, the Company regularly purchases used or contaminated refrigerants, some of which areCFC based, from many different sources, which refrigerants are then reclaimed using the Company's high speed proprietary reclamationequipment, its proprietary 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 through the Company’s laboratory, which has been certified by the Air Conditioning, Heating and Refrigeration Institute(“AHRI”), 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, highvolume, high-speed proprietary equipment, including the patented Zugibeast® system. Certain of these RefrigerantSide® Services, whichencompass 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 servicesfor its customers. The Company offers diagnostic services that are intended to predict potential problems in air conditioning and refrigerationsystems before they occur. The Company’s Chiller Chemistry® offering integrates several fluid tests of an operating system and thecorresponding laboratory results into an engineering report providing its customers with an understanding of the current condition of thefluids, the cause for any abnormal findings and the potential consequences if the abnormal findings are not remediated. Fluid Chemistry®,an abbreviated version of the Company’s Chiller Chemistry® offering, is designed to quickly identify systems that require furtherexamination. The Company also delivers global energy services (“GES”) offerings to large industrial and commercial companies both in the United Statesand internationally. A large portion of its (“GES”) business involves the performance of “investment grade” Energy Savings Assessments(“ESAs”) for process and utility systems including steam, refrigeration and process cooling, process heating, waste heat recovery, andcombined heat and power systems. These assessments can identify significant energy and cost savings projects for customers that lead to adirect reduction in carbon dioxide (“CO2”) emissions from the site or from the power plants. The Company’s (“GES”) division is staffed byengineers that are recognized as Energy Experts and Qualified Best 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 forsteam systems for the United Nations Industrial Development Organization. The Company’s staff have trained more than 2,500 industrialplant personnel in the US and internationally, and have developed and are currently delivering training curriculums in 10 different countries. The Company has also been awarded several US patents for its Performance Monitoring & Optimization System (“PMOS”), which is asystem for measuring, modifying and improving the efficiency of energy systems, including air conditioning and refrigeration systems, inindustrial and commercial applications. The Company’s PMOS is able to identify specific inefficiencies in the operation of refrigerationsystems and, when used with Hudson’s RefrigerantSide® Services, can increase the efficiency of the operating systems thereby reducingenergy usage and costs. Improving the system efficiency reduces power consumption thereby directly reducing CO2 emissions at the powerplants or onsite. In addition, the Company’s ChillSmart® offering, which combines the PMOS methodology with the Company’s ChillerChemistry® offering, provides a snapshot of a packaged chiller’s operating efficiency and health. ChillSmart® provides a very effectivepredictive maintenance tool and helps our customers to identify the operating chillers that cause higher operating costs. In November 2012,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. Source: HUDSON TECHNOLOGIES INC /NY, 10-K, February 28, 2014Powered 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.4Source: HUDSON TECHNOLOGIES INC /NY, 10-K, February 28, 2014Powered 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. Carbon Offset Projects CFC refrigerants are ozone depleting substances and are also highly weighted greenhouse gases that contribute to global warming andclimate change. The destruction of CFC refrigerants may be eligible for verified emission reductions that can be converted and monetizedinto carbon offset credits that may be traded in the emerging carbon offset markets. The Company is pursuing opportunities to acquire CFCrefrigerants and is developing relationships within the emerging environmental markets in order to develop opportunities for the creation andmonetization of verified emission reductions from the destruction of CFC 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 Statesmarket for those sales and services. The Company has Alliances in Europe and South Africa, and over time, the Company expects tointroduce its technology and offerings to several other geographies around the world. Suppliers The Company's financial performance and its ability to sell refrigerants is in part dependent on its ability to obtain sufficient quantities ofvirgin, non-CFC based refrigerants, and of reclaimable CFC and non-CFC based, refrigerants from manufacturers, wholesalers,distributors, bulk gas brokers and from other sources within the air conditioning, refrigeration and automotive aftermarket industries, and oncorresponding demand for refrigerants. The Company's refrigerant sales include CFC based refrigerants, which are no longermanufactured. Additionally, the Company's refrigerant sales include non-CFC based refrigerants, including HCFC and HFC refrigerants,which are the most-widely used refrigerants. Effective January 1, 1996, the Act limited the production of virgin HCFC refrigerants, whichproduction was further limited in January 2004. Federal regulations enacted in January 2004 established production and consumptionallowances for HCFCs and imposed limitations on the importation of certain virgin HCFC refrigerants. Additionally, effective January 1,2010, the Act further limited the production of virgin HCFC refrigerants, and in December 2009 the EPA published the 2009 Rule whichlimited the total pounds of virgin HCFC refrigerants that could be produced and imported for the years 2010 through 2014 to levels which,based upon the EPA’s estimates, would require as much as 20% of the service demand for existing equipment to be met by reclaimed orrecycled HCFC refrigerants. As a result of litigation, the 2009 Rule was vacated, and in April 2013 the EPA issued the April 2013 Ruleproviding for further reductions in the production and importation of HCFC refrigerants in the years 2013 and 2014 when compared to thereductions originally established in the 2009 Rule. In December 2013, a proposed rule was issued by the EPA to address production andconsumption allowances for HCFC refrigerants for the years 2015 through 2019. A final rule to address production and consumptionallowances for the years 2015 through 2019 has not yet been issued by the EPA. See “Recent Developments.” Under the Act, production ofcertain virgin HCFC refrigerants is scheduled to be phased out by the year 2020 and production of all virgin HCFC refrigerants is scheduledto be phased out by 2030. The limitations imposed by and under the Act may limit supplies of virgin refrigerants for the foreseeable future orcause a significant increase in the price of virgin HCFC refrigerants. 5Source: HUDSON TECHNOLOGIES INC /NY, 10-K, February 28, 2014Powered 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. Customers The Company provides its services to commercial, industrial and governmental customers, as well as to refrigerant wholesalers,distributors, contractors and to refrigeration equipment manufacturers. Agreements with larger customers generally provide for standardizedpricing for specified services. For the year ended December 31, 2013, two customers each accounted for 10% or more of the Company’s revenues and, in the aggregatethese two customers accounted for 23% of the Company’s revenues. At December 31, 2013, there were $344,000 in outstandingreceivables from these customers. For the year ended December 31, 2012, two customers each accounted for 10% or more of the Company’s revenues and, in the aggregatethese two customers accounted for 28% of the Company’s revenues. At December 31, 2012, there were no outstanding receivables fromthese customers. Marketing Marketing programs are conducted through the efforts of the Company's executive officers, Company sales personnel, and third parties. Hudson employs various marketing methods, including direct mailings, technical bulletins, in-person solicitation, print advertising,response to quotation requests and the internet through the Company’s website (www.hudsontech.com). Information in the Company'swebsite 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 officersdevote significant time and 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 itsoperations, the breadth of services offered by the Company, including proprietary RefrigerantSide® Services and other on-site services, andprice, particularly with respect to refrigerant sales. The Company competes with numerous regional and national companies that market reclaimed and virgin refrigerants and providerefrigerant reclamation services. Certain of these competitors possess greater financial, marketing, distribution and other resources for thesale and distribution of refrigerants than the Company 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, assuch, the demand and market acceptance for these services are subject to uncertainty. Competition for these services primarily consists oftraditional methods of solving the industry's problems. The Company’s marketing strategy is to educate the marketplace that its alternativesolutions are available and that RefrigerantSide® Services are superior to traditional methods. The market acceptance for these services issubject to uncertainty. Insurance The Company carries insurance coverage that it considers sufficient to protect the Company's assets and operations. The Companycurrently maintains general commercial liability insurance and excess liability coverage for claims up to $11,000,000 per occurrence and$12,000,000 in the aggregate. The Company attempts to operate in a professional and prudent manner and to reduce potential liability risksthrough specific risk management efforts, including ongoing employee training. The refrigerant industry involves potentially significant risks of statutory and common law liability for environmental damage and personalinjury. The Company, and in certain instances, its officers, directors and employees, may be subject to claims arising from the Company'son-site or off-site services, including the improper release, spillage, misuse or mishandling of refrigerants classified as hazardous or non-hazardous substances or materials. The Company may be held strictly liable for damages, which could be substantial, regardless ofwhether it exercised due care and complied with all relevant laws and regulations. Hudson maintains environmental impairment insurance of $10,000,000 per occurrence, and $10,000,000 annual aggregate, for eventsoccurring subsequent to November 1996. 6Source: HUDSON TECHNOLOGIES INC /NY, 10-K, February 28, 2014Powered 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. Government Regulation The business of refrigerant sales, reclamation and management is subject to extensive, stringent and frequently changing federal, state andlocal laws and substantial regulation under these laws by governmental agencies, including the EPA, the United States Occupational Safetyand 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 anddisposal of hazardous and non-hazardous materials and the health and safety of workers, and require the Company and, in certaininstances, its employees, to obtain and maintain licenses in connection with its operations. This extensive regulatory framework imposessignificant compliance burdens and risks on the Company. Hudson and its customers are subject to the requirements of the Act, and the regulations promulgated thereunder by the EPA, which make itunlawful for any person in the course of maintaining, servicing, repairing, and disposing of air conditioning or refrigeration equipment, toknowingly vent or otherwise release or 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 accordancewith standards established by AHRI prior to resale to a person other than the owner of the equipment from which it was recovered. The EPAadministers a certification program pursuant to which applicants certify to reclaim refrigerants in compliance with AHRI standards. TheCompany is one of only three certified refrigerant testing laboratories under AHRI’s laboratory certification program, which is a voluntaryprogram that certifies the ability of a laboratory to test refrigerant in accordance with the AHRI 700 standard. In addition, the EPA has established a mandatory certification program for air conditioning and refrigeration technicians. Hudson'stechnicians have applied for or obtained such certification. The Company may also be subject to regulations adopted by the EPA which impose certain reporting requirements arising out of theimportation of certain HCFCs, and arising out of the importation, 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 hazardousmaterials or substances and imposes requirements for handling, packaging, labeling and transporting refrigerants and which regulate theuse and operation of the Company’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 hazardouswastes to comply with certain operating standards. Before transportation and disposal of hazardous wastes off-site, generators of such wastemust package and label their shipments consistent with detailed regulations and prepare a manifest identifying the material and stating itsdestination. The transporter must deliver the hazardous waste in accordance with the manifest to a facility with an appropriate RCRApermit. Under RCRA, impurities removed from refrigerants consisting of oils mixed with water and other contaminants are not presumed tobe hazardous waste. The Emergency Planning and Community Right-to-Know Act of 1986, as amended requires the annual reporting by the Company ofEmergency and Hazardous Chemical Inventories (Tier II reports) to the various states in which the Company operates and requires theCompany to file annual Toxic Chemical Release Inventory Forms with the EPA. The Comprehensive Environmental Response, Compensation and Liability Act of 1980 (“CERCLA”), establishes liability for clean-up costsand environmental damages to current and former facility owners and operators, as well as persons who transport or arrange fortransportation of hazardous substances. Almost all states have similar statutes regulating the handling and storage of hazardoussubstances, hazardous wastes and non-hazardous wastes. Many such statutes impose requirements that are more stringent than theirfederal counterparts. The Company could be subject to substantial liability under these statutes to private parties and government entities, insome instances without any fault, for fines, remediation costs and environmental damage, as a result of the mishandling, release, orexistence 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 specialprocedures and measures for the handling of certain hazardous and toxic substances. State laws, in certain circumstances, mandateadditional measures for facilities handling specified materials. The Company believes that it is in compliance with all material regulations relating to its material business operations. 7Source: HUDSON TECHNOLOGIES INC /NY, 10-K, February 28, 2014Powered 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. Quality Assurance & Environmental Compliance The Company utilizes in-house quality and regulatory compliance control procedures. Hudson maintains its own analytical testinglaboratory, which is AHRI certified, to assure that reclaimed refrigerants comply with AHRI purity standards and employs portable testingequipment when performing on-site services to verify certain quality specifications. The Company employs five persons engaged full-time inquality control and to monitor the Company's operations for regulatory compliance. Employees The Company has 91 full and 2 part time employees including air conditioning and refrigeration technicians, chemists, engineers, sales andadministrative personnel. 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 the high-speed equipment, components and process to reclaim refrigerants. The Company also holds a registered trademark forits Zugibeast®. The United States patent will expire in May 2014 and the foreign patents will expire between May 2014 and December2014. The Company also holds several U.S. and foreign patents, as well as pending patent applications, related to certain RefrigerantSide®Services and supporting systems developed by the Company for certain systems and processes for measuring and improving the efficiencyof refrigeration systems, and for certain refrigerant recycling and reclamation technologies. These patents will expire between February 2017and 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 protectionthat patents may afford the Company, that any patent applications will result in issued patents or that patents will not be circumvented orinvalidated. Technological development in the refrigerant industry may result in extensive patent filings and a rapid rate of issuance of newpatents. Although the Company believes that its existing patents and the Company's equipment do not and will not infringe upon existingpatents or violate proprietary rights of others, it is possible that the Company's existing patent rights may not be valid or that infringement ofexisting or future patents or violations of proprietary rights of others may occur. In the event the Company's equipment or processes infringe,or are alleged to infringe, patents or other proprietary rights of others, the Company may be required to modify the design of its equipment orprocesses, obtain a license or defend a possible patent infringement action. There can be no assurance that the Company will have thefinancial or other resources necessary to enforce or defend a patent infringement or proprietary rights violation action or that the Company willnot become liable for damages. The Company also relies on trade secrets and proprietary know-how, and employs various methods to protect its technology. However, suchmethods may not afford complete protection and there can be no assurance that others will not independently develop such know-how orobtain access to the Company's know-how, concepts, ideas and documentation. Failure to protect its trade secrets could have a materialadverse effect on the Company. Recent Developments In April 2013, the EPA issued the April 2013 Rule providing for further reduction in the production and importation of HCFC refrigerants inthe years 2013 and 2014 when compared to the reductions originally established in the 2009 Rule. The April 2013 Rule allows for theproduction or importation of 63 million and 51 million pounds of HCFC-22 in 2013 and 2014, respectively. In December 2013, a proposedrule was issued by the EPA to address production and consumption allowances for HCFC refrigerants for the years 2015 through 2019 (the“Period”). In the proposed rule, the EPA discusses several alternatives for the phase down of HCFC-22 during the Period, and identifies apreferred approach that would implement a linear draw down for the production or importation of HCFC-22 that would start at 30 millionpounds in 2015 and reduce by approximately 6 million pounds each year and end at zero in 2020. A final rule to address production andconsumption allowances for the years 2015 through 2019 has not yet been issued by the EPA. The Company expects that a final ruleestablishing the actual number of pounds for the entire Period will be issued in 2014. 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 shouldbe reviewed carefully together with the other information contained in this report. Some of the factors are beyond Hudson’s control and futuretrends are difficult to predict. 8Source: HUDSON TECHNOLOGIES INC /NY, 10-K, February 28, 2014Powered 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 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 limitthe amount of our borrowings under the facility. Moreover, the terms of our credit facility also include negative covenants that, among otherthings, may limit our ability to incur additional indebtedness. If we violate any loan covenants and do not obtain a waiver from our lender, ourindebtedness under the credit facility would become immediately due and payable, and the lender could foreclose on its security, which couldmaterially adversely affect our business and future financial condition and could require us to curtail or otherwise cease our existingoperations. 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 andimplementation of our operations. Due to fluctuations in the price, demand and availability of new refrigerants, our existing credit facility thatexpires in June 2015 may not in the future be sufficient to provide all of the capital that we need to acquire and manage our inventories ofnew refrigerant. As a result, we may be required to seek additional equity or debt financing in order to develop our RefrigerantSide® Servicesbusiness our refrigerant sales business and our other businesses. We have no current arrangements with respect to, or sources of,additional financing other than our existing credit facility. There can be no assurance that we will be able to obtain any additional financing onterms acceptable to us or at all. Our inability to obtain financing, if and when needed, could materially adversely affect our business andfuture 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 postponeor cancel purchases of the Company’s products or services. Either or both of these conditions could have severe negative implications to our business thatmay exacerbate 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 ofoperation. 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 forenvironmental damage and personal injury. We, and in certain instances, our officers, directors and employees, may be subject to claimsarising from our on-site or off-site services, including the improper release, spillage, misuse or mishandling of refrigerants classified ashazardous or non-hazardous substances or materials. We may be strictly liable for damages, which could be substantial, regardless ofwhether we exercised due care and complied with all relevant laws and regulations. Our current insurance coverage may not be sufficient tocover potential claims, and adequate levels of insurance coverage may not be available in the future at a reasonable cost. A partially orcompletely uninsured claim against us, if successful and of sufficient magnitude would have a material adverse effect on our business andfinancial condition. Our business and financial condition is substantially dependent on the sale and continued environmental regulation ofrefrigerants. Our business and prospects are largely dependent upon continued regulation of the use and disposition of refrigerants. Changes ingovernment regulations relating to the emission of refrigerants into the atmosphere could have a material adverse effect on us. Failure bygovernment authorities to otherwise continue to enforce existing regulations or significant relaxation of regulatory requirements could alsoadversely affect demand for our services and products. 9Source: HUDSON TECHNOLOGIES INC /NY, 10-K, February 28, 2014Powered 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 is subject to significant regulatory compliance burdens. The refrigerant reclamation and management business is subject to extensive, stringent and frequently changing federal, state and locallaws and substantial regulation under these laws by governmental agencies, including the EPA, the OSHA and DOT. Although we believethat we are in substantial compliance with all material regulations relating to our material business operations, amendments to existingstatutes and regulations or adoption of new statutes and regulations which affect the marketing and sale of refrigerant could require us tocontinually alter our methods of operation and/or discontinue the sale of certain of our products resulting in costs to us that could besubstantial. We may not be able, for financial or other reasons, to comply with applicable laws, regulations and permit 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 criminalsanctions, which would, if of 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 competeeffectively. The markets for our services and products are highly competitive. We compete with numerous regional and national companies whichprovide refrigerant recovery and reclamation services, as well as companies which market and deal in new and reclaimed alternativerefrigerants, including certain of our suppliers, some of which possess greater financial, marketing, distribution and other resources than us. We also compete with numerous manufacturers of refrigerant recovery and reclamation equipment. Certain of these competitors haveestablished reputations for success in the service of air conditioning and refrigeration 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 affectour business and financial condition. Refrigerant sales continue to represent a significant portion of our revenues. Therefore, our business is substantially dependent on theavailability of both new and used refrigerants in large quantities, which may be affected by several factors including, without limitations: (i)commercial production and consumption limitations imposed by the Act and legislative limitations and ban on HCFC refrigerants; (ii) the banon production of CFC based refrigerants under the Act; (iii) the proposed legislation which, if enacted, could impose limitations on productionand consumption of HFC refrigerants; (iv) introduction of new refrigerants and air conditioning and refrigeration equipment; (v) pricecompetition resulting from additional market entrants; (vi) changes in government regulation on the use and production of refrigerants; and(vii) reduction in demand for refrigerants. We do not maintain firm agreements with any of our suppliers of refrigerants and we do not holdallowances permitting us to purchase and import HCFC refrigerants abroad. Sufficient amounts of new and/or used refrigerants may not beavailable to us in the future, particularly as a result of the further phase down of HCFC production, or may not be available on commerciallyreasonable terms. Additionally, we may be subject to price fluctuations, periodic delays or shortages of new and/or used refrigerants. Ourfailure to obtain and resell sufficient quantities of virgin refrigerants on commercially reasonable terms, or at all, or to obtain, reclaim andresell sufficient quantities of 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 nowsubject to various state and federal regulations relating to the sale, use and emissions of refrigerants. In addition, federal legislation has beenproposed that, if enacted, would impose limitations on the production and importation of certain virgin HFC refrigerants, and current andfuture global warming and climate change or related legislation and/or regulations may impose additional compliance burdens on us and onour customers and suppliers which could potentially result in increased administrative costs, decreased demand in the marketplace for ourproducts, and/or increased costs for our supplies and products. 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 amaterial adverse effect on our business and prospects. We have the ability to designate and issue preferred stock, which may have rights, preferences and privileges greater thanHudson’s common stock and 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 therights, preferences, privileges and restrictions, including voting rights, of these shares, without further shareholder approval. The rights ofthe holders of our common stock will be subject to, and may be adversely affected by, the rights of holders of any additional preferred stockthat may be issued by us in the future. Our ability to issue preferred stock without shareholder approval could have the effect of making itmore difficult for a third party to acquire a majority of our voting stock, thereby delaying, deferring or preventing a change in control of us. 10Source: HUDSON TECHNOLOGIES INC /NY, 10-K, February 28, 2014Powered 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. If our common stock were delisted from NASDAQ it would be subject to “penny stock” rules which could negatively impact itsliquidity and our shareholders’ ability to sell their shares. Our common stock is currently listed on the NASDAQ Capital Market. We must comply with numerous NASDAQ MarketPlace rules inorder to continue the listing of our common stock on NASDAQ. There can be no assurance that we can continue to meet the rules requiredto maintain the NASDAQ listing of our common stock. If we are unable to maintain our listing on NASDAQ, the market liquidity of ourcommon stock may be severely limited. Our management effectively controls our affairs. Currently, our officers and directors collectively own approximately 26% of our outstanding common stock. Accordingly, our officers anddirectors are in a position to significantly effect, and potentially fully control us and the election of our directors. There is no provision forcumulative 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 thatcomplement or expand our existing business. We may be unable to identify suitable acquisition candidates or negotiate acceptable terms. Inaddition, we may not be able to successfully integrate any assets, liabilities, customers, systems or management personnel we may acquireinto our operations and we may not be able to realize related revenue synergies and cost savings within expected time frames. There can beno assurance that we will be able to successfully integrate any acquisition 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 unaffiliatedthird party at an annual rental of $27,000 pursuant to a month to month rental agreement. The Company's Baton Rouge, Louisiana depot facility is a 1,800 square foot facility located in a multi-tenant building leased from anunaffiliated third party at an annual rental of $15,000 pursuant to an arrangement expiring in February 2015. The Company's Champaign, Illinois facility is located in a 48,000 square foot building, which was purchased by the Company in May 2005for $999,999. On June 1, 2012, the Company entered into a mortgage note with Busey Bank for $855,000. The note bears interest at thefixed rate of 4% per annum, amortizing over 60 months and maturing on June 1, 2017. The mortgage note is secured by the Company’sland and building located in Champaign, Illinois. As of December 31, 2013, the Company has $603,000 outstanding under this mortgageand 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 76,000 square foot facility located in an approximately130,000 square foot building. The building is leased from an unaffiliated third party at an annual rental of $327,000, pursuant to anarrangement expiring in December 2014. The Company's Charlotte, North Carolina depot facility is an 8,500 square foot facility located in a multi-tenant building leased from anunaffiliated third party at an annual rental of $62,000 pursuant to an agreement expiring in March 2016. The Company’s Stony Point, New York depot facility is an 18,000 square foot facility located in a multi-tenant building leased from anunaffiliated third party at an annual rental of $116,000 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. Thebuilding is leased from an unaffiliated third party at an annual rental of $93,000 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 leasedfrom an unaffiliated 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-tenantbuilding leased from an unaffiliated third party at an annual rental of $28,000 pursuant to an agreement expiring in August 2017. 11Source: HUDSON TECHNOLOGIES INC /NY, 10-K, February 28, 2014Powered 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 Tulsa, Oklahoma energy and carbon services facility is located in a 2,304 square foot office facility located in a multi-tenantbuilding leased from an unaffiliated third party at an annual rental of $26,000 which includes our share of operating expenses. This leaseexpires 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 Companytypically enters into short-term leases for its facilities and whenever possible extends the expiration date of such leases. The Companybelieves that its insurance policies are adequate 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 leasedfacility in Hillburn, NY (the “Hillburn Facility”), which the Company vacated in June 2006. A failed hose connection to one of the Company'soutdoor storage tanks allowed liquid R-11 refrigerant (“R-11”) to discharge from the tank into the concrete secondary containment area inwhich the subject tank was located. Between April 1999 and May 1999, with the approval of the New York State Department of Environmental Conservation (“DEC”), theCompany constructed and put into operation a remediation system to remove R-11 levels in the groundwater under and around the HillburnFacility. In September 2000, the Company signed an Order on Consent with the DEC, which was amended in May 2001, whereby the Companyagreed to operate the remediation system and perform monthly testing at the Hillburn Facility until remaining groundwater contaminationhas been effectively abated. In July 2005, the DEC approved a modification of the Order on Consent to reduce the frequency of testing frommonthly to quarterly. Additionally, in March 2013, the DEC approved a further modification of the Order on Consent to modify the operationof the remediation system and to further reduce the frequency and scope of testing. The Company is continuing to operate the remediationsystem pursuant to the approved modifications to that Order on Consent. Based upon the most recent modifications to the Order onConsent, as of December 31, 2013, the Company accrued, as an expense in its consolidated financial statements, the costs that theCompany believes it will incur in connection with its compliance with the Order of Consent through December 31, 2018. There can be noassurance that additional testing will not be required or that the Company will not incur additional costs and such costs in excess of theCompany’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 to CERCLA. The Company submitted opposition to the listing within the sixty-day comment period. In September 2003,the EPA advised the Company that it has no current plans to finalize the process for listing of the Hillburn Facility on the NPL and that theEPA 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, 2013 and 2012, the Company incurred $100,000 and $102,000, respectively, in additionalremediation costs in connection with the matters above. There can be no assurance that the ultimate outcome of the 1999 Release will nothave a material adverse effect on the Company's financial condition and results of operations. There can be no assurance that the EPA willnot change its current plans and seek to finalize the process of listing the Hillburn Facility on the NPL, or that the ultimate outcome of such alisting will not have a material adverse effect on the Company's financial condition and results of operations. Item 4. Mine Safety Disclosures Not Applicable 12Source: HUDSON TECHNOLOGIES INC /NY, 10-K, February 28, 2014Powered 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 theperiods indicated, the range of the high and low sale prices for the Common stock as reported by NASDAQ. The number of record holders of the Company's common stock was approximately 164 as of February 28, 2014. The Company believesthat there are in excess of 3,502 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 iswithin the discretion of the Board of Directors and will depend upon the Company's earnings, its capital requirements and financial condition,borrowing covenants, and other relevant factors. The Company presently intends to retain all earnings, if any, to finance the Company'soperations and development of its business and does not expect to declare or pay any cash dividends on its Common stock in the foreseeablefuture. In addition, the Company has a credit facility with PNC Bank National Association (“PNC”) that, among other things, restricts theCompany'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, 2013. Item 6. Selected Financial Data Not Applicable 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 ofthe Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve a number of known and unknown risks,uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially differentfrom any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, butare not limited to, changes in the demand and price for refrigerants (including unfavorable market conditions adversely affecting the demandfor, and the price of refrigerants), the Company's ability to source CFC and non-CFC based refrigerants, regulatory and economic factors,seasonality, competition, litigation, the nature of supplier or customer arrangements that become available to the Company in the future,adverse weather conditions, possible technological obsolescence of existing products and services, possible reduction in the carrying value oflong-lived assets, estimates of the useful life of its assets, potential environmental liability, customer concentration, the ability to obtainfinancing, 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-lookingstatements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date thestatement was made. Critical Accounting Policies The Company's discussion and analysis of its financial condition and results of operations are based upon its consolidated financialstatements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation ofthese consolidated financial statements requires the Company to make estimates and judgments that affect the reported amounts of assets,liabilities, revenues and expenses and related disclosure of contingent assets and liabilities. Several of the Company's accounting policiesinvolve significant judgments, uncertainties and estimations. The Company bases its estimates on historical experience and on variousother assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgmentsabout the carrying values of assets and liabilities. Actual results may differ from these estimates under different assumptions 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 itsallowance for doubtful accounts, inventory reserves, and valuation allowance for the deferred tax assets relating to its net operating loss carryforwards (“NOLs”) and commitments and contingencies. With respect to accounts receivable, the Company estimates the necessaryallowance for doubtful accounts based on both historical and anticipated trends of payment history and the ability of the customer to fulfill itsobligations. For inventory, the Company evaluates both current and anticipated sales prices of its products to determine if a write down of High Low 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 2013 • First Quarter $5.04 $3.59 • Second Quarter $4.45 $3.11 • Third Quarter $3.26 $1.76 • Fourth Quarter $3.72 $1.75 Source: HUDSON TECHNOLOGIES INC /NY, 10-K, February 28, 2014Powered 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.inventory to net realizable value is necessary. In determining the Company’s valuation allowance for its deferred tax assets, the Companyassesses its ability to generate taxable income in the future. The Company utilizes both internal and external sources to evaluate potentialcurrent and future liabilities for various commitments and contingencies. In the event that the assumptions or conditions change in thefuture, the estimates could differ from the original estimates. 13Source: HUDSON TECHNOLOGIES INC /NY, 10-K, February 28, 2014Powered 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. Overview Sales of refrigerants continue to represent a significant portion of the Company’s revenues. The Company’s refrigerant sales are primarilyHCFC and HFC based refrigerants and to a lesser extent CFC based refrigerants that are no longer manufactured. Effective January 1,1996, the Act prohibited the production of virgin CFC refrigerants and limited the production of virgin HCFC refrigerants. Effective January2004, the Act further limited the production of virgin HCFC refrigerants and federal regulations were enacted which established productionand consumption allowances for HCFC refrigerants and imposed limitations on the importation of certain virgin HCFC refrigerants. Underthe Act, production of certain virgin HCFC refrigerants is scheduled to be phased out during the period 2010 through 2020, and production ofall virgin HCFC refrigerants is scheduled to be phased out by 2030. Additionally, effective January 1, 2010, the Act further limited theproduction of virgin HCFC refrigerants, and in December 2009, the EPA issued the 2009 Rule which limited the total pounds of virginHCFC refrigerants that could be produced and imported for the years 2010 through 2014. In 2011, as a result of litigation, the 2009 Rule wasvacated, and in April 2013, the EPA issued a final rule providing for further reductions in the production and importation of HCFC refrigerantsin the years 2013 and 2014 when compared to the reductions originally established in the 2009 Rule. The final rule issued in April 2013allows for the production or importation of 63 million and 51 million pounds of HCFC-22 in 2013 and 2014, respectively. In December 2013, a proposed rule was issued by the EPA to address production and consumption allowances for HCFC refrigerants for theyears 2015 through 2019. In the proposed rule, the EPA discusses several alternatives for the phase down of HCFC-22 during the years2015 through 2019, and identifies a preferred approach that would implement a linear draw down for the production or importation of HCFC-22 that would start at 30 million pounds in 2015 and reduce by approximately 6 million pounds each year and end at zero in 2020. A finalrule to address production and consumption allowances for the years 2015 through 2019 has not yet been issued by the EPA. As reflected inour historical operating results, EPA rule making and its corresponding impact on supply, pricing, and market behavior has a material effect on theCompany’s operating results. The Company expects this final rule to have a material impact on the Company’s operating results and financialposition. The Company has created and developed a service offering known as RefrigerantSide® Services. RefrigerantSide® Services are sold tocontractors and end-users whose refrigeration systems are used in commercial air conditioning and industrial processing. These servicesare offered in addition to refrigerant sales and the Company's traditional refrigerant management services, which consist primarily ofreclamation of refrigerants. The Company has created a network of service depots that provide a full range of the Company'sRefrigerantSide® 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 mostreadily appreciate and understand the value that is provided by its RefrigerantSide® Services offering. In pursuing its sales and marketingstrategy, the Company offers its RefrigerantSide® Services to customers in the following industries: petrochemical, pharmaceutical,industrial power, manufacturing, commercial facility and property management and maritime. The Company may incur additional expensesas it develops its RefrigerantSide® Services offering. Results of Operations Year ended December 31, 2013 as compared to the year ended December 31, 2012 Revenues for the year ended December 31, 2013 were $58,634,000, an increase of $2,187,000 or 4% from the $56,447,000 reportedduring the comparable 2012 period. The increase in revenues was attributable to an increase in refrigerant revenues of $2,073,000 and anincrease in RefrigerantSide® Services revenues of $114,000. The increase in refrigerant revenue is primarily related to an increase in theselling price per pound of certain refrigerants sold, which accounted for an increase in revenues of $6,052,000, offset in part by a decrease inthe number of pounds of certain refrigerants sold, which accounted for a decrease in revenues of $3,979,000. The increase inRefrigerantSide® Services was primarily attributable to an increase in the number of jobs completed offset to a lesser extent by a decrease inthe price of jobs completed when compared to the same period in 2012. 14Source: HUDSON TECHNOLOGIES INC /NY, 10-K, February 28, 2014Powered 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. Cost of sales, excluding the lower of cost or market (“LCM”) adjustment, for the year ended December 31, 2013 was $44,664,000 or 76% ofsales. In addition, the LCM adjustment to the HCFC-22 inventory was $14,700,000 for a total cost of sales for year ended December 31,2013 of $59,364,000. The LCM inventory adjustment, which significantly increased our cost of sales, was due to an approximately 50%decline in HCFC-22 refrigerant pricing from April to September 2013 following the issuance of the EPA’s final rule in April 2013. The cost ofsales for the year ended December 31, 2012 was $33,905,000 or 60% of sales. The increase in the cost of sales, excluding the lower of costor market adjustment, is due to an increase in the cost per pound of refrigerant sold compared to the same period in 2012. The increase inthe cost of sales percentage from 60% for the year ended December 31, 2012 to 76% for the year ended December 31, 2013 is due to theadjusted cost of HCFC-22 per pound relative to the selling price yielding a lower gross margin on the HCFC-22 sales for the year endedDecember 31, 2013 compared to the gross margins on the HCFC-22 for the same period in 2012. Operating expenses for the year ended December 31, 2013 were $7,755,000, an increase of $93,000 from the $7,662,000 reported duringthe comparable 2012 period. The increase in operating expenses is due to an increase in selling expenses of $284,000 primarily due toincreased selling payroll costs, offset by a decrease in general and administrative expenses of $191,000 primarily due to a decrease inadministrative payroll expense. Other income (expense) for the year ended December 31, 2013 was ($933,000), compared to the ($684,000) reported during the comparable2012 period. Other income (expense) includes interest expense of $933,000 and $693,000 for the comparable 2013 and 2012 periods,respectively. The increase in interest expense is due to increased borrowing on the PNC credit facility. Income tax benefit for the year ended December 31, 2013 was $3,576,000 compared to an income tax provision for the year endedDecember 31, 2012 of $1,395,000. For 2013 the income tax benefit of $3,576,000 was for federal and state income tax at statutory ratesapplied to the pre-tax loss. 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 asset valuation allowance. Net loss for the year ended December 31, 2013 was $5,842,000, a decrease of $18,643,000 from the $12,801,000 net income reportedduring the comparable 2012 period, primarily due to the reduction in gross profit, partially offset by an income tax benefit. Liquidity and Capital Resources At December 31, 2013, the Company had working capital, which represents current assets less current liabilities of $22,255,000, a decreaseof $5,153,000 from the working capital of $27,408,000 at December 31, 2012. The decrease in working capital is primarily attributable to thenet loss for the period. Inventory and trade receivables are principal components of current assets. At December 31, 2013, the Company had inventories of$33,967,000, a decrease of $6,200,000 from $40,167,000 at December 31, 2012. The decrease in the inventory balance is due to the lowerof cost or market adjustment to reduce the cost of HCFC refrigerants, which are currently being phased down by the EPA, as well as thetiming and availability of inventory purchases and the sale of refrigerants. The Company's ability to sell and replace its inventory on a timelybasis and the prices at which it can be sold are subject, among other things, to current market conditions and the nature of supplier orcustomer 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. AtDecember 31, 2013, the Company had trade receivables, net of allowance for doubtful accounts, of $3,706,000, an increase of $1,750,000from $1,956,000 at December 31, 2012. The Company's trade receivables are concentrated with various wholesalers, brokers, contractorsand end-users within the refrigeration industry that are primarily 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 equitysecurities, and bank borrowings. Net cash used by operating activities for the year ended December 31, 2013, was $6,417,000 compared with net cash used by operatingactivities of $9,266,000 for the comparable 2012 period. Net cash used by operating activities for the 2013 period was primarily attributable tothe net loss for the period. Net cash used by investing activities for the year ended December 31, 2013, was $397,000 compared with net cash used by investingactivities of $1,997,000 for the comparable 2012 period. The net cash used by investing activities for the 2013 period was primarily related toinvestment in general purpose equipment for the Company’s Champaign, Illinois facility. Net cash provided by financing activities for the year ended December 31, 2013, was $3,492,000 compared with net cash provided byfinancing activities of $11,296,000 for the comparable 2012 period. The net cash provided by financing activities for the 2013 period wasprimarily due to an increase in short term borrowing and, to a lesser extent, the issuance of common stock upon the exercise of employeestock options. 15Source: HUDSON TECHNOLOGIES INC /NY, 10-K, February 28, 2014Powered 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. At December 31, 2013, the Company had cash and cash equivalents of $669,000. The Company continues to assess its capitalexpenditure needs. The Company may, to the extent necessary, continue to utilize its cash balances to purchase equipment primarily for itsoperations. The Company estimates that the total capital expenditures for 2014 will be approximately $1,000,000. The following is a summary of the Company's significant contractual cash obligations for the periods indicated that existed as of December31, 2013 (in 000’s): _______________(1) The estimated interest payments on revolving debt are based on the interest rates in effect per the Second PNC Amendment and theoutstanding revolving debt obligation as of December 31, 2013 through the expiration of the PNC Facility (as defined below). (2) The estimated future interest payments on all debt other than revolving debt are based on the respective interest rates applied to thedeclining principal balances on each of the notes. On June 22, 2012, a subsidiary of Hudson entered into the PNC Facility (the “PNC Facility”). Under the terms of the PNC Facility, Hudsoncould 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 eligiblereceivables and eligible inventory, as described in the PNC Facility. On February 15, 2013, the PNC Facility was amended. As a result ofthis 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 andrevolving loans in a maximum amount up to $36,000,000. Amounts borrowed under the PNC Facility may be used by Hudson for workingcapital needs and to reimburse drawings under letters of credit. At December 31, 2013, total borrowings under the PNC Facility were$19,080,000, and there was $8,349,000 available to borrow under the revolving line of credit. The effective interest rate under the PNCFacility was 3.0% at December 31, 2013. 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 thedomestic rate (as set forth in the PNC Facility) and at the end of each interest period with respect to loans bearing interest at the Eurodollarrate (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) eachthree months from the commencement of such Eurodollar rate loan or (b) the end of the interest period. As of December 31, 2013, interestcharges with respect to loans are computed on the actual principal amount of loans outstanding during the month at a rate per annum equalto (A) with respect to domestic rate loans, the sum of (i) a rate per annum equal to the higher of (1) the base commercial lending 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 sumof the Eurodollar rate plus 2.75%. Hudson granted to PNC, for itself, and as agent for such other lenders as thereafter may become a lender under the PNC Facility, a securityinterest in Hudson’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 paydividends on common stock or preferred stock, and also includes certain events of default, including payment defaults, breaches ofrepresentations and warranties, covenant defaults, cross-defaults to other obligations, events of bankruptcy and insolvency, certain ERISAevents, judgments in excess of specified amounts, impairments to guarantees and a change of control. 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, testedquarterly on a rolling twelve month basis. Fixed Charge Coverage Ratio is defined in the PNC Facility, with respect to any fiscal period, asthe ratio of (a) EBITDA of Hudson for such period, minus unfinanced capital expenditures (as defined in the PNC Facility) made by Hudsonduring such period, minus the aggregate amount of cash taxes paid by Hudson during such period, minus the aggregate amount ofdividends and distribution made by Hudson during such period, minus the aggregate amount of payments made with cash by Hudson tosatisfy soil sampling and reclamation related to environmental cleanup at the Company’s former Hillburn, NY facility during such period (tothe extent not already included in the calculation of EBITDA as determined by the Agent) to (b) the aggregate amount of all principal paymentsdue and/or made, except principal payments related to outstanding revolving advances with regard to all funded debt (as defined in the PNCFacility) 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 suchperiod, plus (iii) amortization expenses for such period, plus (iv) non-cash charges. 16 Twelve Month Period Ended December 31, 2014 2015 2016 2017 2018 & Thereafter Total Long and short term debt andcapital lease obligations: Principal$15,367 $4,284 $274 $113 $0 $20,038 Estimated interest (1) (2) 604 307 10 1 0 922 Operating leases 785 315 202 124 70 1,496 Total contractual cash obligations$16,756 $4,906 $486 $238 $70 $22,456 Source: HUDSON TECHNOLOGIES INC /NY, 10-K, February 28, 2014Powered 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, February 28, 2014Powered 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. On October 25, 2013, we entered into the Second Amendment to the PNC Facility, (the “Second PNC Amendment”) which among otherthings, waived our requirement to comply with the minimum fixed charge coverage ratio covenant of 1.10 to 1.00 for the fiscal quarter endedSeptember 30, 2013, required under the PNC Facility. The covenant waiver was required primarily because of the adverse impact on ourresults of operations from the significant reduction in the selling price of HCFC-22 following the EPA’s final ruling allowing for the productionor importation of 63 million and 51 million pounds of HCFC-22 in 2013 and 2014, respectively. The amendment suspended the minimum fixed charge ratio covenant until the quarterly period ending March 31, 2015 and set theminimum EBITDA for the quarters ended December 31, 2013 through December 31, 2014, as follows: After giving effect to the Second PNC Amendment, as of December 31, 2013, the Company was in compliance with the EBITDA covenant.EBITDA for the 3 month period ended December 31, 2013 was ($2,010,000), which was in compliance with the amended EBITDA covenantfor the period of ($2,154,000) by $144,000. The EBITDA was calculated as follows: EBITDA, which represents a non-GAAP measurement of certain financial results, does not represent and should not be considered as analternative to net income or cash provided by operating activities as determined by GAAP. We make no representation or assertion thatEBITDA is indicative of our cash provided by operating activities or results of operations. We have provided a reconciliation of the net loss toEBITDA solely for the purpose of complying with SEC regulations and not as an indication that EBITDA is a substitute measure for incomefrom operations. After giving effect to the Second PNC Amendment, the Company was in compliance with all covenants, as amended, required under thePNC Facility as of December 31, 2013. The Company’s ability to comply with these covenants in future quarters may be affected by eventsbeyond the Company’s control, including general economic conditions, weather conditions, regulations and refrigerant pricing. Although weexpect to remain in compliance with all covenants in the PNC Facility, as amended, depending on our future operating performance andgeneral economic conditions, we cannot make any assurance that we will continue to be in compliance. The amendment redefines the “Revolving Interest Rate” as well as the “Term Loan Rate” as previously defined in the agreement as follows: “Revolving Interest Rate” shall mean an interest rate per annum equal to (a) the sum of the Alternate Base Rate plus one percent (1.00%)with respect to Domestic Rate Loans and (b) the sum of the Eurodollar Rate plus two and three quarters of one percent (2.75%) with respectto the Eurodollar Rate. “Term Loan Rate” shall mean an interest rate per annum equal to (a) the sum of the Alternate Base Rate plus one percent (1.00%) withrespect to the Domestic Rate Loans and (b) the sum of the Eurodollar Rate plus two and three quarters of one percent (2.75%) with respect toEurodollar Rate Loans. 17Period Amount 3 month period ended December 31, 2013 $(2,154,000) 3 month period ending March 31, 2014 $494,000 6 month period ending June 30, 2014 $2,035,000 9 month period ending September 30, 2014 $3,012,000 12 month period ending December 31, 2014 $1,879,000 For the 3 months ending December 31, 2013 Net loss $(1,530,000) less: income tax benefit (934,000) Loss before income taxes (2,464,000) less: interest expense 246,000 less: depreciation and amortization 208,000 Earnings before interest, taxes, depreciation, and amortization$(2,010,000) Source: HUDSON TECHNOLOGIES INC /NY, 10-K, February 28, 2014Powered 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 commitments under the PNC Facility will expire and the full outstanding principal amount of the loans, together with accrued andunpaid interest, are due and payable in full on June 22, 2015, unless the commitments are terminated and the outstanding principal amountof the loans are accelerated sooner following an event of default. 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 buildinglocated in Champaign, Illinois. As of December 31, 2013, the principal balance of this mortgage note was $603,000. The Company believes that it will be able to satisfy its working capital requirements for the foreseeable future from anticipated cash flowsfrom operations and available funds under the PNC Facility. Any unanticipated expenses, including, but not limited to, an increase in thecost of refrigerants purchased by the Company, an increase in operating expenses or failure to achieve expected revenues from theCompany's RefrigerantSide® Services and/or refrigerant sales or additional expansion or acquisition costs that may arise in the future wouldadversely affect the Company's future capital needs. There can be no assurance that the Company's proposed or future plans will besuccessful, and as such, the Company may require additional capital sooner than anticipated, which capital 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 participates in an industry that is highly regulated, and changes in the regulations affecting our business could affect ouroperating results. Currently the Company purchases virgin, HCFC and HFC refrigerants and reclaimable, primarily HCFC and CFC,refrigerants from suppliers and its customers. To the extent that the Company is unable to source sufficient quantities of refrigerants or isunable to obtain refrigerants on commercially reasonable terms or experiences a decline in demand and/or price for refrigerants sold by it, theCompany could realize reductions in revenue from refrigerant sales, which could have a material adverse effect on the Company’s operatingresults and financial position. For the year ended December 31, 2013, two customers each accounted for 10% or more of the Company’s revenues and, in the aggregatethese two customers accounted for 23% of the Company’s revenues. At December 31, 2013, there were $344,000 in outstandingreceivables from these customers. For the year ended December 31, 2012, two customers each accounted for 10% or more of the Company’s revenues and, in the aggregatethese two customers accounted for 28% of the Company’s revenues. At December 31, 2012, there were no outstanding receivables fromthese customers. 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 orservices by any such customer could have a material adverse effect on the Company's operating results and financial position. 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 refrigerant and service sales, availability and price of refrigerant products (virgin or reclaimable), changes in reclamation technologyand regulations, timing in introduction and/or retrofit or replacement of CFC and non CFC based refrigeration equipment, the rate ofexpansion of the Company's operations, and by other factors. The Company's business is seasonal in nature with peak sales of refrigerantsoccurring in the first half of each year. During past years, the seasonal decrease in sales of refrigerants has resulted in losses particularly inthe fourth quarter of the year. During the second quarter of 2013, cool spring weather negatively impacted the demand for refrigerants andresulted in reductions in the Company’s refrigerant revenues, which adversely affected the Company’s results of operations. Delays orinability in securing adequate supplies of refrigerants at peak demand periods, lack of refrigerant demand, increased expenses, decliningrefrigerant 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 thatto a lesser extent there is a similar seasonal element to RefrigerantSide® Service revenues as refrigerant sales. The Company is continuingto assess its RefrigerantSide® Service revenues seasonal trend. Recent Accounting Pronouncements In March 2013, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2013-05, whichamends the guidance in ASC 830, “Foreign Currency Matters”. ASU No. 2013-05 addresses the accounting for the cumulative translationadjustment (“CTA”) when a parent either sells a part or all of its investment in a foreign entity or no longer holds a controlling financialinterest in a subsidiary or group of assets that is a nonprofit activity or a business within a foreign entity. This amended guidance is to beapplied prospectively and is effective for the Company beginning on January 1, 2014. The implementation of the amended accountingguidance is not expected to have a material impact on our consolidated financial position or results of operations. 18Source: HUDSON TECHNOLOGIES INC /NY, 10-K, February 28, 2014Powered 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 July 2013, the FASB issued ASU 2013-11, "Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a NetOperating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists." ASU 2013-11 requires an entity to present anunrecognized tax benefit, or a portion of an unrecognized tax benefit, in the financial statements as a reduction to a deferred tax asset for a netoperating loss carryforward, a similar tax loss, or a tax credit carryforward, except as follows. To the extent a net operating loss carryforward, asimilar tax loss, or a tax credit carryforward is not available at the reporting date under the tax law of the applicable jurisdiction to settle anyadditional income taxes that would result from the disallowance of a tax position or the tax law of the applicable jurisdiction does not requirethe entity to use, and the entity does not intend to use, the deferred tax asset for such purpose, the unrecognized tax benefit should bepresented in the financial statements as a liability and should not be combined with deferred tax assets. The amendments in this Update areeffective for fiscal years (and interim periods within those years) beginning after December 15, 2013. The adoption of ASU 2013-11 is notexpected 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 Sensitivity We are exposed to market risk primarily from fluctuations in interest rates on the PNC Facility. The PNC Facility is a $40,000,000 securedfacility. Interest on loans under the PNC Facility is payable in arrears on the first day of each month with respect to loans bearing interest atthe domestic rate (as set forth in the PNC Facility) and at the end of each interest period with respect to loans bearing interest at theEurodollar 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 Eurodollar rate loan or (b) the end if he interest period. As of December 31, 2013interest charges with respect to loans are computed on the actual principal amount of loans outstanding during the month at a rate perannum 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 toEurodollar rate loans, the sum of the Eurodollar rate plus 2.75%. The outstanding balance on the PNC Facility as of December 31, 2013was $19,080,000. Future interest rate changes on our borrowing under the PNC Facility may have an impact on our consolidated results ofoperations. 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 Procedures Disclosure Controls and Procedures The Company, under the supervision and with the participation of the Company’s management, including the Company’s Chief ExecutiveOfficer and Chief Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures, as defined in Rule13a-15(e) of the Securities Exchange Act of 1934, as amended (“Exchange Act”), as of the end of the period covered by this report. Based onthat evaluation, the Chief Executive Officer and the Chief Financial Officer have concluded that the Company’s disclosure controls andprocedures provide reasonable assurance that they are effective to ensure that information required to be disclosed in reports filed under theExchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities andExchange Commission, and that such information is accumulated and communicated to the Company’s management, including itsprincipal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. Because of theinherent limitations in all control systems, any controls and procedures, no matter how well designed and operated, can provide onlyreasonable assurance of achieving the desired control objectives, and management necessarily is required to apply its judgment inevaluating the cost-benefit relationship of possible controls and procedures. Furthermore, the Company’s controls and procedures can becircumvented by the individual acts of some persons, by collusion of two or more people or by management override of the control andmisstatements due to error or fraud may occur and not be detected on a timely basis. 19Source: HUDSON TECHNOLOGIES INC /NY, 10-K, February 28, 2014Powered 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. Changes in Internal Control over Financial Reporting There were no changes in the Company’s internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) in thequarter ended December 31, 2013 that materially affected, or are reasonably likely to materially affect, the Company’s internal control overfinancial reporting. Management’s Report on Internal Control over Financial Reporting Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting for theCompany as defined in Rule 13a-15(f) under the Exchange Act. The Company’s internal control over financial reporting is designed toprovide reasonable assurance to the Company’s management and board of directors regarding the preparation and fair presentation ofpublished 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 thosesystems determined to 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 overfinancial reporting as of December 31, 2013. In making this assessment, the Company’s Chief Executive Officer and Chief Financial Officerhave used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control –Integrated Framework. Based on our assessment, we believe that, as of December 31, 2013, the Company’s internal control over financialreporting 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 overfinancial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to rulesof the SEC that permit the Company to provide only management’s report in this annual report on Form 10-K. Item 9B. Other Information None 20Source: HUDSON TECHNOLOGIES INC /NY, 10-K, February 28, 2014Powered 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 principaloccupation and his business experience for at least the past five years. In addition to the information presented below regarding eachnominee’s specific experience, qualifications, attributes and skills that led our Board to the conclusion that he should serve as a director, wealso believe that all of our directors have a reputation for integrity, honesty and adherence to high ethical standards. They each havedemonstrated business acumen and an ability to exercise sound judgment, as well as a commitment to service to the Company and ourBoard. The following table sets forth information with respect to the directors and executive officers of the Company: Name Age PositionKevin J. Zugibe 50 Chairman of the Board and Chief Executive OfficerBrian F. Coleman 52 President and Chief Operating Officer, DirectorJames R. Buscemi 60 Chief Financial OfficerCharles F. Harkins, Jr. 52 Vice President SalesStephen P. Mandracchia 54 Vice President Legal and Regulatory and SecretaryVincent P. Abbatecola 67 DirectorDominic J. Monetta 72 DirectorOtto C. Morch 80 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 itsinception in 1991. From May 1987 to May 1994, Mr. Zugibe was employed as a power engineer with Orange and Rockland Utilities, Inc., amajor public utility, where he was responsible for all HVAC applications. Mr. Zugibe is a licensed professional engineer, and from December1990 to May 1994, he was a member of Kevin J. Zugibe & Associates, a professional engineering firm. We believe Mr. Zugibe’squalifications to sit on our Board of Directors include his 27 years of experience in the air conditioning and refrigeration industry including asour founder, our Chairman and Chief Executive Officer for 22 years. Mr. Zugibe is the brother-in-law of Stephen P. Mandracchia. 21Source: HUDSON TECHNOLOGIES INC /NY, 10-K, February 28, 2014Powered 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 has been a Director of the Company since December 2007, and President and Chief Operating Officer of the Companysince August 21, 2001 and served as Chief Financial Officer of the Company from May 1997 until December 2002. From June 1987 to May1997, Mr. Coleman was employed by, and since July 1995, was a partner with BDO USA, LLP, the Company's independent registeredpublic accounting firm. We believe Mr. Coleman’s qualifications to sit on our Board of Directors include his prior financial and accountingexperience obtained as a partner with BDO USA, LLP, and his 17 years of experience in the air conditioning and refrigeration industryincluding as our President and Chief Operating Officer for the past 11 years. James R. Buscemi has been Chief Financial Officer of the Company since December 2002 and served as Corporate Controller from June1998 until December 2002. Prior to joining the Company, Mr. Buscemi held various financial positions within Avnet, Inc, including ChiefFinancial Officer of Avnet's electric 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 ofcapacities since joining the Company in 1992. Prior to joining the Company, Mr. Harkins served in the U.S. Army for 13 years attaining therank of Staff Sergeant; he is a graduate of 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 2003and has been Secretary of the Company since April 1995. Mr. Mandracchia has served in a variety of capacities with the Company since1993. Mr. Mandracchia was a member of the law firm of Martin, Vandewalle, Donohue, Mandracchia & McGahan, Great Neck, New Yorkuntil December 31, 1995 (having been affiliated 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 WaterCompany, Spring Valley, New York, where he has been employed since May 1971. He was formerly the Chairman of the InternationalPackaged Ice Association and a trustee of Nyack Hospital. Mr. Abbatecola serves on the Rockland Board of Governors, the United Hospice ofRockland Board and the St. Thomas Aquinas College President’s Council. We believe that Mr. Abbatecola’s qualifications to sit on our Boardinclude his business experience obtained as Vice President of Abbey Ice and Spring Water Company, his 20 years of experience in the airconditioning and refrigeration industry by virtue of his service on our Board including as Chairman of the Company’s Audit Committee for 19years. Dominic J. Monetta, DPA has been a Director of the Company since April 1996. Dr. Monetta has since August 1993, been the President ofResource Alternatives, Inc., a corporate development firm concentrating on resolving technically oriented managerial issues facing chiefexecutive officers and their senior executives. From December 1991 to May 1993, Dr. Monetta served as the Director of Defense Researchand Engineering for Research and Advanced Technology, United States Department of Defense. From June 1989 to December 1991, Dr.Monetta served as the Director of the Office of New Production Reactors, United States Department of Energy. Dr. Monetta’s qualifications tosit on our board include his chemical engineering and other management experience obtained as a senior executive for the US Departmentsof Energy and Defense. Dr. Monetta has 17 years of experience in the air conditioning and refrigeration industry by virtue of his service onour Board and includes his membership on the Company’s Audit Committee for the last 6 years and Occupational, Safety andEnvironmental Protection Committee for the last 12 years. Otto C. Morch has been a Director of the Company since March 1996. Mr. Morch was a Senior Vice President of Commercial Banking atProvident Savings Bank, F.A. for more than five years until his retirement in December 1997. We believe that Mr. Morch’s qualifications tosit on our Board include his financial and other experience obtained as a Senior Vice President at Provident Savings Bank, F.A., his 18 yearsof experience in the air conditioning and refrigeration industry by virtue of his service on our Board including his membership on theCompany’s Audit Committee for 18 years. Hudson has established a Compensation Committee of the Board of Directors, which is responsible for, among other things, assisting theBoard in overseeing Hudson’s executive compensation strategy and reviewing and approving the compensation of our executive officers andfor the administration of Hudson’s employee benefit plans. The Compensation Committee is also responsible for reviewing and approvingthe compensation of the Company’s directors. The executive officers do not determine executive or director compensation but provideinformation and recommendations to the Compensation Committee upon its request. The Compensation Committee has delegatedauthority to the Company’s Chief Executive Officer to grant stock options under the Company’s 2004 and 2008 stock incentive plans toemployees who are not executive officers of up to a maximum of 10,000 shares per employee and up to an aggregate of 50,000 shares peryear. The members of the Committee are Messrs. Abbatecola, Monetta and Morch, each of whom (i) is an “independent” director as definedunder the rules of NASDAQ and (ii) qualifies as “outside” directors within the meaning of Internal Revenue Code Section 162(m) and as“non-employee” directors within the meaning of Rule 16b-3 under the Securities Exchange Act of 1934, as amended. Hudson has an Audit Committee of the Board of Directors, which supervises the audit and financial procedures of Hudson and is responsiblefor selection of the Company’s independent registered public accountants. The members of the Audit Committee are Messrs. Abbatecola,Monetta and Morch, each of whom is an “independent” director as defined under the rules of NASDAQ. The Audit Committee does not havea member that qualifies as a “financial expert” under the federal securities laws. Each of the members of the Audit Committee has beenactive in the business community and has broad and diverse backgrounds, and financial experience. Two of the current members haveserved on Hudson’s Audit Committee and have overseen the financial review by Hudson’s independent auditors for 12 years. Hudsonbelieves that the current members of the Audit Committee are able to fully and faithfully perform the functions of the Audit Committee andthat Hudson does not need to install a “financial expert” on the Audit Committee. 22Source: HUDSON TECHNOLOGIES INC /NY, 10-K, February 28, 2014Powered 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, February 28, 2014Powered 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 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 theterm of each class expiring in successive years, and is to consist, as nearly as possible, of one-half of the number of directors constituting theentire Board. The By-laws provide for 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 by the shareholders). At Hudson’s August 27, 2013 Annual Meeting of the Shareholders,Messrs. Abbatecola, Coleman and Morch were elected as directors to terms of office that will expire at the Annual Meeting of Shareholders tobe held in the year 2015. Messrs. Monetta and Zugibe are currently serving as directors and their terms of office expire at the Annual Meetingof Shareholders to be held in the year 2014. 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 ourequity securities, to file reports of ownership and changes in ownership with the SEC. Officers, directors, and greater than 10 percentshareholders are required by SEC regulation 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 theyear ended December 31, 2013, all filing requirements applicable to all officers, directors and greater than 10% beneficial shareholders werecomplied with except for (i) late filings made in December 2013 in connection with stock options issued in August 2012 to Messrs.Abbatecola, Monetta and Morch; (ii) late filings made in November 2013 in connection with stock options issued in October 2013 to Messrs.Abbatecola, Monetta and Morch; and (iii) a late filing made in December 2013 in connection with a sale by Mr. Monetta made in December2013.. 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 executiveofficer, principal financial officer, principal accounting officer or controller and any persons performing similar functions. We will provide acopy of its code of ethics to any person 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. Item 11. Executive Compensation The following table discloses, for the years indicated, the compensation for our Chief Executive Officer and for our two most highlycompensated executive officers, other than the Chief Executive Officer, who were serving as executive officers at the end of the year endedDecember 31, 2013 and whose total compensation during the year ended December 31, 2013 exceeded $100,000 (the “Named Executives”). SUMMARY COMPENSATION TABLE _____________________________(1) We utilize the grant date fair value using the Black-Scholes method as described in Note 10 to the Notes to the Consolidated FinancialStatements.(2) Messrs. Coleman and Zugibe did not receive any compensation for services as a director during the years ended December 31, 2013 and2012. (3) Non-Equity Incentive Plan Compensation was earned in 2012, a portion of which was paid in 2012. The balance was paid in 2013.(4) Represents payments of annual premiums for long term care insurance purchased for the benefit of the executive officers and, whereapplicable, the executive officer’s spouse. 23Name and Principal Position Year Salary ($) Bonus ($) (3) Stock Awards ($) Option Awards ($) (1) Non-Equity Incentive Plan Compensation ($) Non-qualified Deferred Compensation Earnings All Other Compensation ($) (4) Total ($) Kevin J. Zugibe, 2013 $288,500 $0 $0 $0 $0 $0 $0 $288,500 Chairman, ChiefExecutive Officer (2) 2012 $264,580 $264,000 $0 $0 $0 $0 $0 $528,580 Brian F. Coleman, 2013 $212,500 $0 $0 $0 $0 $0 $9,623 $222,123 President, ChiefOperating Officer, Director(2) 2012 $205,465 $174,000 $0 $0 $0 $0 $9,623 $389,088 Charles F. Harkins, Jr., 2013 $191,000 $0 $0 $0 $0 $0 $8,371 $199,371 Vice President Sales 2012 $187,618 $145,000 $0 $0 $0 $0 $8,371 $340,989 Source: HUDSON TECHNOLOGIES INC /NY, 10-K, February 28, 2014Powered 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. 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, whichcurrently expires in October 2014 and is automatically renewable for successive two year terms unless either party gives notice oftermination at least ninety days prior to the expiration date of the then current term. Pursuant to the agreement, as amended by the FirstAmendment to Restated Employment Agreement dated December 29, 2008, Mr. Zugibe is receiving an annual base salary of $288,500with such increases and bonuses as our Board of Directors may determine. The agreement 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 after the 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 notcompete with us in specified geographic areas for a period of twenty-four months after his termination for any reason. The agreement alsoprovides that, in the event of his involuntary separation from Hudson without cause, or in the event of his voluntary separation for a goodreason as enumerated in the agreement, Mr. Zugibe will receive severance payments, in the form of the continuation of his annual basesalary and benefits for a period of twenty-four months, and a lump sum payment equivalent to the highest bonus paid to Mr. Zugibe in thethree years prior to his termination, pro-rated to the date of his termination. We are the beneficiary of a “key-man” insurance policy on the lifeof Mr. Zugibe in the amount of $1,000,000. 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 to certain covenants and restrictions, which include an agreement that Mr. Coleman will not compete with us inspecified geographic areas for a period of eighteen months after his termination for any reason. The agreement provides, in the event of hisdisability, for the continuation of at least 75% of his salary for up to one hundred twenty days after the commencement of his disability. Theagreement also provides that, in the event of his involuntary separation without cause, or in the event of his voluntary separation for a goodreason as enumerated in the agreement, Mr. Coleman will receive severance payments, in the form of the continuation of his annual basesalary and benefits for a period of eighteen months, and a lump sum payment equivalent to the highest bonus paid to him in the three yearsprior 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 to certain covenants and restrictions, which include an agreement that Mr. Harkins will not compete with us in specifiedgeographic areas for a period of eighteen months 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 to one hundred twenty days after the commencement of his disability. The agreementalso provides that in the event of his involuntary separation without cause, or in the event of his voluntary separation for a good reason asenumerated in the agreement, Mr. Harkins will receive severance payments, in the form of the continuation of his annual base salary andbenefits for a period of eighteen months, and a lump sum payment equivalent to the highest bonus paid to him in the three years prior to histermination, 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 wasto be determined by the independent Board members at the end of fiscal year 2013 based upon our achieving earnings in excess of a pre-determined level forfiscal 2013 (the “Benchmark”). At the end of fiscal year 2013, the independent Board members determined not to establish a bonus pool or to make any cashawards to any of the executive officers. 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 2013. 24Source: HUDSON TECHNOLOGIES INC /NY, 10-K, February 28, 2014Powered 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, 2013. Options exercised bythe Named Executives during the fiscal year ended December 31, 2013 are set forth in the tables below. No stock awards have been issuedto the Named Executives. Stock Option Plans 1994 Stock Option Plan Name Number of Securities Underlying Unexercised Options (#) Exercisable Option Exercise Price ($) Option Expiration Date Kevin J. Zugibe, Chairman, Chief Executive Officer 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 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., Vice President Sales 50,016 $1.76 12/29/2015 23,125 $1.40 3/31/2016 Name Date of Grant of Exercised Options Number of Shares purchased upon Exercise of Options Date of Exercise Exercise Price Kevin J. Zugibe, Chairman, Chief Executive Officer 3/5/2004 87,500 3/21/2013 $1.13 3/31/2004 193,750 3/21/2013 $1.15 9/17/2004 18,750 3/21/2013 $0.83 10/1/2004 18,750 3/21/2013 $0.95 Brian F. Coleman, President, Chief Operating Officer, Director 3/5/2004 75,000 3/7/2013 $1.13 3/31/2004 18,750 3/7/2013 $1.15 9/17/2004 12,500 3/7/2013 $0.83 10/1/2004 12,500 3/7/2013 $0.95 Charles F. Harkins, Jr., Vice President, Sales 12/19/2005 2,484 5/21/2013 $1.76 12/29/2005 8,139 5/21/2013 $1.76 10/10/2006 7,900 5/8/2013 $1.02 12/17/2009 62,377 5/21/2013 $1.26 Source: HUDSON TECHNOLOGIES INC /NY, 10-K, February 28, 2014Powered 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.We adopted an Employee Stock Option Plan (the “1994 Plan”) effective October 31, 1994 pursuant to which 725,000 shares of our commonstock were reserved for issuance upon the exercise of options designated as either (i) options intended to constitute incentive stock options(“ISOs”) under the Internal Revenue Code of 1986, as amended (the “Code”), or (ii) nonqualified options. ISOs could be granted under the1994 Plan to our employees and officers. Non-qualified options could be granted to consultants, directors (whether or not they areemployees), our employees or officers. Effective November 1, 2004, our ability 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 lawsof descent and distribution. In general, upon termination of employment of an optionee, all options granted to such person that are notexercisable on the date of such termination immediately terminate, and any options that are exercisable terminate 90 days followingtermination of employment. 25Source: HUDSON TECHNOLOGIES INC /NY, 10-K, February 28, 2014Powered 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, 2013, we had no options outstanding to purchase 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 stockwere reserved for issuance upon the exercise of options designated as either (i) ISOs under the Code, or (ii) nonqualified options. ISOs couldbe granted under the 1997 Plan to our employees and officers. Non-qualified options could be granted to consultants, directors (whether ornot they are employees), our employees or officers. Stock appreciation rights could also be issued in tandem with stock options. EffectiveJune 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 lawsof descent and distribution. In general, upon termination of employment of an optionee, all options granted to such person that are notexercisable on the date of such termination immediately terminate, and any options that are exercisable terminate 90 days followingtermination of employment. As of December 31, 2013, we had options outstanding to purchase 193,710 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 currentlyreserved for issuance upon the exercise of options, designated as either (i) ISOs, under the Code or (ii) non-qualified options, or for issuanceupon the granting of restricted stock, deferred stock or other stock-based awards. ISOs may be granted under the 2004 Plan to employeesand 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 officers of Hudson. Stock appreciation rights may also be issued in tandem withstock options. The 2004 Plan is intended to qualify under Rule 16b-3 under the Exchange Act and is administered by our Compensation Committee of theBoard of Directors. The Committee, within the limitations of the 2004 Plan, determines the persons to whom options will be granted, thenumber of shares to be covered by each option, whether the options granted are intended to be ISOs, the duration and rate of exercise of eachoption, the exercise price per share and the manner of exercise and the time, manner and form of payment upon exercise of an option. In thecase of restricted stock, deferred stock or other stock-based awards, the Committee, within the limitations of the 2004 Plan, determines thepersons to whom awards will be granted, the number of shares of stock subject to the award, and the restrictions on issuance and transfer ofsuch shares. Unless the 2004 Plan is sooner terminated, the ability to grant options or other awards under the 2004 Plan will expire onSeptember 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 (or110% of fair market value in the case of ISO’s granted to a 10% shareholder). In the case of ISOs, the aggregate fair market value of sharesfor which ISOs granted to any employee are exercisable for the first time by such employee during any calendar year (under all of our stockoption plans) may not exceed $100,000. Non-qualified options granted under the 2004 Plan may not be granted at a price less than the fairmarket value of our common stock. Options granted under the 2004 Plan will expire not more than ten years from the date of grant (fiveyears in the case of ISOs granted to a 10% shareholder). Except as otherwise provided by the Committee with respect to non-qualifiedoptions, all options, restricted stock, deferred stock or other stock-based awards granted under the 2004 Plan are not transferable during agrantee’s lifetime but are transferable at death by will or by the laws of descent and distribution. In general, upon termination of employmentof a grantee, all options, restricted stock, deferred stock or other stock-based awards granted to such person which are not exercisable on thedate of such termination immediately terminate, and any options that are exercisable terminate 90 days following termination ofemployment. As of December 31, 2013, we had options outstanding to purchase 1,827,317 shares of common stock and 26,930 shares are reserved forfuture issuances under 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 currentlyreserved for issuance upon the exercise of options, designated as either (i) ISOs, under the Code or (ii) non-qualified options, or for issuanceupon the granting of restricted stock, deferred stock or other stock-based awards. ISOs may be granted under the 2008 Plan to employeesand 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 officers of Hudson. Stock appreciation rights may also be issued in tandem withstock options. 26Source: HUDSON TECHNOLOGIES INC /NY, 10-K, February 28, 2014Powered 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 2008 Plan is intended to qualify under Rule 16b-3 under the Exchange Act and is administered by our Compensation Committee of theBoard of Directors. The Committee, within the limitations of the 2008 Plan, determines the persons to whom options will be granted, thenumber of shares to be covered by each option, whether the options granted are intended to be ISOs, the duration and rate of exercise of eachoption, the exercise price per share and the manner of exercise and the time, manner and form of payment upon exercise of an option. In thecase of restricted stock, deferred stock or other stock-based awards, the Committee, within the limitations of the 2008 Plan, determines thepersons to whom awards will be granted, the number of shares of stock subject to the award, and the restrictions on issuance and transfer ofsuch shares. Unless the 2008 Plan is sooner terminated, the ability to grant options or other awards under the 2008 Plan will expire onJune 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 (or110% of fair market value in the case of ISO’s granted to a 10% shareholder). In the case of ISOs, the aggregate fair market value of sharesfor which ISOs granted to any employee are exercisable for the first time by such employee during any calendar year (under all of our stockoption plans) may not exceed $100,000. Non-qualified options granted under the 2008 Plan may not be granted at a price less than the fairmarket value of our common stock. Options granted under the 2008 Plan will expire not more than ten years from the date of grant (fiveyears in the case of ISOs granted to a 10% shareholder). Except as otherwise provided by the Committee with respect to non-qualifiedoptions, all options, restricted stock, deferred stock or other stock-based awards granted under the 2008 Plan are not transferable during agrantee’s lifetime but are transferable at death by will or by the laws of descent and distribution. In general, upon termination of employmentof a grantee, all options, restricted stock, deferred stock or other stock-based awards granted to such person which are not exercisable on thedate of such termination immediately terminate, and any options that are exercisable terminate 90 days following termination ofemployment. As of December 31, 2013, we had options outstanding to purchase 505,197 shares of common stock and 2,494,803 shares are reserved forfuture issuances of 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 $20,000 shall be paid in the form of stock options, and receive reimbursement for out-of-pocket expenses incurred for attendance atmeetings of the Board of Directors and Board Committee meetings. In 2013, non-employee directors each received a total annual fee of$38,000 and reimbursement for out-of-pocket expenses incurred for attendance at meetings of the Board of Directors and Board committeemeetings. The following table discloses the compensation of the non-employee directors who served as our directors during the year endedDecember 31, 2013. We reimburse each of our non-employee directors for their reasonable expenses incurred in connection with attendingmeetings of our board of directors and related committees. DIRECTOR COMPENSATION__________________________(1) We utilize the grant date fair value using the Black-Scholes method as described in Note 10 to the Notes to the Consolidated FinancialStatements.(2) As of December 31, 2013, Mr. Abbatecola has options to purchase 161,399 shares of common stock outstanding, Mr. Morch has optionsto purchase 134,399 shares of common stock outstanding, and Dr. Monetta has options to purchase 121,399 shares of common stockoutstanding. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters The following table sets forth information as of February 28, 2014 based on information obtained from the persons named below, withrespect to the beneficial ownership of Hudson’s common stock by (i) each person known by Hudson to be the beneficial owner of more than5% of Hudson’s outstanding common stock, (ii) the Named Executives, (iii) each director of Hudson, and (iv) all of our directors andexecutive officers as a group: 27Name Fees earned or paid in cash Stock Awards Option Awards (1) Non-Equity Incentive Plan Compensation Nonqualified Deferred Compensation Earnings All Other Compensation Total Vincent P. Abbatecola (2) $18,000 $0 $20,000 $0 $0 $0 $38,000 Dominic J. Monetta (2) $18,000 $0 $20,000 $0 $0 $0 $38,000 Otto C. Morch (2) $18,000 $0 $20,000 $0 $0 $0 $38,000 Source: HUDSON TECHNOLOGIES INC /NY, 10-K, February 28, 2014Powered 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. BENEFICIAL OWNERSHIP TABLE * = 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 February 28, 2014. Each beneficial owner's percentage ownership is determined by assuming that options and warrants that are held by such person (but notheld by any other person) and which are exercisable within 60 days from February 28, 2014 have been exercised. Unless otherwise noted,Hudson believes that all persons named in the table have sole voting and investment power with respect to all shares of our common stockbeneficially owned by them. The address for each beneficial owner, unless otherwise noted, is c/o Hudson Technologies, Inc. at: PO Box1541, One Blue Hill Plaza, Pearl River, New York 10965. (2) Includes (i) 93,750 shares which may be purchased at $1.02 per share; (ii) 18,750 shares which may be purchased at $0.87 per share;(iii) 18,750 shares which may be purchased at $0.83 per share; (iv) 18,750 shares which may be purchased at $2.15 per share; (v) 123,750shares which may be purchased at $1.76 per share; (vi) 35,000 shares which may be purchased at $1.40 per share; (vii) 9,300 shares whichmay be purchased at $1.02 per share, (viii) 195,000 shares that may be purchased at $0.85 per share; and (ix) 78,000 shares which may bepurchased at $1.26 per share, under immediately exercisable options. (3) Includes (i) 62,500 shares which may be purchased at $1.02 per share; (ii) 12,500 shares which may be purchased at $0.87 per share;(iii) 12,500 shares which may be purchased at $0.83 per share; (iv) 12,500 shares which may be purchased at $2.15 per share; (v) 82,500shares which may be purchased at $1.76 per share; (vi) 32,500 shares which may be purchased at $1.40 per share; (vii) 8,100 shares whichmay be purchased at $1.02 per share, (viii) 180,000 shares which may be purchased at $0.85 per share; and (ix) 75,000 shares which maybe purchased at $1.26 per share, under immediately exercisable options. (4) Includes (i) 50,016 shares which may be purchased at $1.76 per share; and (ii) 23,125 shares which may be purchased at $1.40 pershare, under immediately exercisable options. (5) Includes the following shares which may be purchased by Mr. Buscemi upon the exercise of options previously granted to him: (i) 6,250shares which may be purchased at $2.15 per share; (ii) 41,250 shares which may be purchased at $1.76 per share; (iii) 16,625 shareswhich may be purchased at $1.40 per share; (iv) 100,000 shares that may be purchased at $0.85 per share; and (v) 48,000 shares whichmay be purchased at $1.26 per share, under immediately exercisable options. (6) Includes (i) 1,196,045 shares held of record in the name of Mr. Mandracchia’s wife, Theresa Mandracchia, over which Mr. Mandracchiahas sole voting power and shared dispositive power, and (ii) the following shares which may be purchased by Mr. Mandracchia upon theexercise of options previously granted to him: (a) 31,250 shares which may be purchased at $1.02 per share; (b) 6,250 shares which may bepurchased at $0.87 per share; (c) 6,250 shares which may be purchased at $0.83 per share; (d) 6,250 shares which may be purchased at$2.15 per share; (e) 51,250 shares which may be purchased at $1.76 per share; (f) 20,750 shares which may be purchased at $1.40 pershare; (g) 7,400 shares which may be purchased at $1.02 per share; (h) 125,000 shares that may be purchased at $0.85 per share; and (i)58,000 shares which may be purchased at $1.26 per share, under immediately 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 shares which may be purchased at $1.72 per share; (iv) 25,000 shares that may be purchased at $1.31 per share; (v) 10,281shares which may be purchased at $ 3.27 per share; and (vi) 21,118 shares which may be purchased at $1.88 per share under immediatelyexercisable 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 shares which may be purchased at $1.31 per share; (iv) 10,281 shares which may be purchased at $3.27 per share; and (v)21,118 shares which may be purchased at $1.88 per share under immediately exercisable options 28Title of Class Name of Beneficial Owner Amount and Nature of Beneficial Ownership (1) Percent of Class Common Stock Kevin J. Zugibe 4,635,928(2) 18.05%Common Stock Brian F. Coleman 845,250(3) 3.31%Common Stock Charles F. Harkins 73,141(4) * Common Stock James R. Buscemi 435,055(5) 1.72%Common Stock Stephen P. Mandracchia 1,951,445(6) 7.68%Common Stock Vincent P. Abbatecola 201,399(7) * Common Stock Dominic J. Monetta 221,499(8) * Common Stock Otto C. Morch 147,699(9) * Common Stock Marathon Capital Management 1,623,964(10) 6.47%Common Stock Perritt Captial Management, Inc. 1,524,200(11) 6.07%Common Stock William Blair & Company, LLC 2,152,938(12) 8.58%Common Stock All directors and executive officers asa group (Eight Persons) 8,511,416(13) 31.32%Source: HUDSON TECHNOLOGIES INC /NY, 10-K, February 28, 2014Powered 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, February 28, 2014Powered 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. (9) Includes (i) 13,000 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 shares that may be purchased at $1.72 per share; (iv) 25,000 shares which may be purchased at $1.31 per share; (v) 10,281shares which may be purchased at $3.27 per share; and (vi) 21,118 shares which may be purchased at $1.88 per share under immediatelyexercisable options. (10) Represents aggregate amount of beneficially owned common stock as reported in a Schedule 13G/A filed by Marathon CapitalManagement, LLC on January 23, 2014. The address of Marathon Capital Management, LLC is 4 North Park Drive, Suite 106, HuntValley, MD 21030. (11) Represents aggregate amount of beneficially owned common stock as last reported in a Schedule 13G filed by Perritt Capital Management, Inc., PerrittMicroCap Opportunities Fund, Inc. and Perritt Funds, Inc. on February 14, 2014. The address of Perritt Capital Management, Inc. is 300 South WackerDrive, Suite 2880, Chicago, Illinois 60606. (12) Represents aggregate amount of beneficially owned common stock as reported in a Schedule 13G filed by William Blair & Company,LLC on February 6, 2014. The address of William Blair & Company, LLC is 222 W. Adams, Chicago, IL 60606. (13) Includes exercisable options to purchase 2,084,013 shares of common stock which may be purchased under immediately exercisableoptions. Equity Compensation Plan The following table provides certain information with respect to all of Hudson’s equity compensation plans as of December 31, 2013. __________________________(1) Includes (i) 73,500 five-year warrants, issued in 2009 to our placement agent in connection with the 2009 Offering (as defined below)exercisable, at $1.4375 per share. 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 marketplacerules. The independent members of the Board are Messrs. Abbatecola, Monetta and Morch. Messrs. Coleman and Zugibe are notindependent as defined under NASDAQ marketplace rules. The independent members of our Board of Directors determine the compensation of our executive officers. The Board of Directors hasestablished a Compensation/Stock Option Committee, which is responsible for recommending to the independent directors thecompensation of our executive officers and for the administration of our employee benefit plans. The members of such committee areMessrs. Abbatecola, Monetta and Morch. In September 2007, the Board established a Nominating Committee consisting of Messrs. Abbatecola, Monetta and Zugibe, and which isresponsible for recommending to the independent directors nominees for election to the Board. Nominations to the Board are made by voteof the independent directors of the Board. The members of our Audit Committee of our Board of Directors are Messrs. Abbatecola, Monetta, and Morch, all of whom are independent asdefined under NASDAQ marketplace rules. 29 Number of securities to be issued upon exercise of outstanding options, warrants and rights Weighted-average exercise price of outstanding options, warrants and rights Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) Plan Category (a) (b) (c) Equity compensation plans approved by security holders 2,517,911 $1.33 2,521,733 Equity compensation plans not approved by securityholders (1) 73,500 $1.44 0 Total 2,591,411 $1.33 2,521,733 Source: HUDSON TECHNOLOGIES INC /NY, 10-K, February 28, 2014Powered 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. 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 Directorand Officer Questionnaires. Our Audit Committee is responsible for reviewing and approving or ratifying related-person transactions. Arelated person is any executive officer, director or more than 5% stockholder, or any immediate family member of the foregoing persons, orentity owned or controlled by such person. In addition, pursuant to our Code of Business Conduct and Ethics, all of our employees anddirectors are required to bring any conflict of interest to the attention of one of the Company’s executive officers or directors. In determiningwhether to approve or ratify a related party transaction, the Audit Committee will consider, among other factors it deems appropriate, whetherthe related party transaction is on terms no less favorable to us than terms generally available to us from an unaffiliated third-party under thesame or similar circumstances, and the extent of the related party’s interest in the transaction. Any transaction which is deemed to be arelated 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'sfinancial statements for the years ended December 31, 2013 and 2012 totaled $179,000 and $169,000, respectively. Audit-Related Fees. In 2013 and 2012, the aggregate fees billed by BDO USA, LLP for assurance and related services that are reasonablyrelated to the performance of the audit or review of the Company's financial statements were none. Tax Fees. In 2013 and 2012 the aggregate fees billed by BDO USA, LLP for professional services rendered for tax advice totaled $42,000and $35,000, respectively. All Other Fees. In 2013 and 2012, all other fees billed by BDO USA LLP for professional services rendered other than the servicesdescribed in the paragraphs 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 theforegoing audit services provided by BDO USA, LLP in 2013. Consistent with the Audit Committee's responsibility for engaging theCompany’s independent auditors, all audit and permitted non-audit services require pre-approval by the Audit Committee. The full AuditCommittee approves proposed services and fee estimates for these services. The Audit Committee chairperson or their designee has beendesignated by the Audit Committee to approve any services arising during the year that were not pre-approved by the Audit Committee. Services approved by the Audit Committee chairperson are communicated to the full Audit Committee at its next regular meeting and theAudit Committee reviews services and fees for the fiscal year at each such meeting. Pursuant to these procedures, the Audit Committeeapproved the foregoing audit services provided by BDO USA, LLP. 30Source: HUDSON TECHNOLOGIES INC /NY, 10-K, February 28, 2014Powered 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)Exhibits 3.1Certificate of Incorporation and Amendment. (1) 3.2Amendment to Certificate of Incorporation, dated July 20, 1994. (1) 3.3Amendment to Certificate of Incorporation, dated October 26, 1994. (1) 3.4Certificate of Amendment of the Certificate of Incorporation dated March 16, 1999. (2) 3.5Certificate of Correction of the Certificate of Amendment dated March 25, 1999. (2) 3.6Certificate of Amendment of the Certificate of Incorporation dated March 29, 1999. (2) 3.7Certificate of Amendment of the Certificate of Incorporation dated February 16, 2001. (4) 3.8Certificate of Amendment of the Certificate of Incorporation of Hudson Technologies, Inc., dated March 20, 2002. (5) 3.9Amendment to Certificate of Incorporation dated January 3, 2003. (6) 3.10Amended and Restated By-Laws adopted July 29, 2011. (15) 10.1Assignment of patent rights from Kevin J. Zugibe to Registrant. (1) 10.21997 Stock Option Plan of the Company, as amended. (3) * 10.31994 Stock Option Plan of the Company. (1)* 10.42004 Stock Incentive Plan. (10)* 10.5Form of Incentive Stock Option Agreement under the 2004 Stock Incentive Plan of the Company with full vestingupon issuance. (7) 10.6Form of Incentive Stock Option Agreement under the 2004 Stock Incentive Plan of the Company with options vestingin equal quarterly installments over two year period. (7) 10.7Form of Non-Incentive Stock Option Agreement under the 2004 Stock Incentive Plan of the Company with full vestingupon issuance. (7) 10.8Commercial Mortgage, dated May 27, 2005, between Hudson Technologies Company and Busey Bank. (8) 10.9Commercial Installment Mortgage Note, dated May 27, 2005, between Hudson Technologies Company and BuseyBank. (8) 10.10Amended and Restated Employment Agreement with Kevin J. Zugibe, as amended. (12)* 10.11Agreement with Brian F. Coleman, as amended. (12)* 10.12Agreement with James R. Buscemi, as amended. (12)* 10.13Agreement with Charles F. Harkins, as amended. (12)* 10.14Agreement with Stephen P. Mandracchia, as amended. (12)* 10.152008 Stock Incentive Plan. (11) 10.16Form of Incentive Stock Option Agreement under the 2008 Stock Incentive Plan with full vesting upon issuance. (12) 10.17Form of Incentive Stock Option Agreement under the 2008 Stock Incentive Plan with options vesting in equalinstallments over two year period. (12) 10.18Form of Non-Incentive Stock Option Agreement under the 2008 Stock Incentive Plan with full vesting upon issuance.(12) 10.19Form of Non-Incentive Stock Option Agreement under the 2008 Stock Incentive Plan with options vesting in equalinstallments over two year period. (12) 10.20Warrant, dated August 5, 2009, for 73,500 shares of Common Stock issued to Roth Capital Partners, LLC. (19) 10.21First Amendment to Amended and Restated Employment Agreement with Kevin J. Zugibe, dated December 30,2008. (12)* 10.22Form of Warrant issued in the 2010 Offering. (13) 10.23Warrant Repurchase Agreement dated March 4, 2011 between the Company and Sonar Partners Fund, L.P. (14) 10.24Warrant Repurchase Agreement dated March 4, 2011 between the Company and Sonar Overseas Fund, Ltd. (14) 10.25Form of Agreement and Consent, to amend warrants issued in connection with the 2010 Offering, dated March 7,2011. (14) 10.26Revolving Credit, Term Loan and Security Agreement, dated June 22, 2012, between Hudson TechnologiesCompany as borrower and PNC 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 ofPNC (16) 31Source: HUDSON TECHNOLOGIES INC /NY, 10-K, February 28, 2014Powered 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. 10.28$4,000,000 Term Note, dated June 22.2012, by Hudson Technologies Company as borrower in favor of PNC. (16) 10.29Guaranty & Suretyship Agreement, dated June 22, 2012, made by Hudson Holdings, Inc. as guarantor on behalf ofHudson Technologies Company. (16) 10.30Guaranty & Suretyship Agreement, dated June 22, 2012, made by the Company as guarantor on behalf of HudsonTechnologies Company. (16) 10.31Patent, Trademarks, and Copyrights Security Agreement, dated June 22, 2012, between the Company and PNC.(16) 10.32Patent, Trademarks, and Copyrights Security Agreement, dated June 22, 2012, between Hudson TechnologiesCompany and PNC. (16) 10.33Long Term Care Insurance Plan Summary. (17)* 10.34First Amendment to Revolving Credit, Term Loan, and Security Agreement between Hudson Technologies Companyand PNC dated February 15, 2013. (18) 10.35$36,000,000 Amended and Restated Revolving Credit Note, dated February 15, 2013, by Hudson TechnologiesCompany as borrower in favor of PNC. (18) 10.36Guarantors’ Ratification dated February 15, 2013, by the Company and Hudson Holdings, Inc. (18) 10.37Second Amendment to Revolving Credit, Term Loan and Security Agreement Between Hudson TechnologiesCompany and PNC Bank, National Association dated October 25, 2013 (20) 10.38Guarantors’ Ratification dated October 25, 2013 by Hudson Technologies, Inc. and Hudson Holdings, Inc. (20) 10.39Amendment No. 1 to the Hudson Technologies, Inc. 2004 Stock Incentive Plan adopted October 22, 2013. (21) * 10.40Amendment No. 1 to the Hudson Technologies, Inc. 2008 Stock Incentive Plan adopted October 22, 2013. (21) * 14Code of Business Conduct and Ethics. (9) 21Subsidiaries of the Company. (21) 23.1Consent of BDO USA, LLP. (21) 31.1Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (21) 31.2Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (21) 32.1Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 ofSarbanes-Oxley Act of 2002. (21) 32.2Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 ofSarbanes-Oxley Act of 2002. (21) 101Interactive data file pursuant to Rule 405 of Regulation S-T.(21) ______ (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 thequarter ended June 30, 1999. (3)Incorporated by reference to the comparable exhibit filed with the Company's Annual Report on Form 10-KSB for theyear ended December 31, 1999. (4)Incorporated by reference to the comparable exhibit filed with the Company's Annual Report on Form 10-KSB for theyear ended December 31, 2000. (5)Incorporated by reference to the comparable exhibit filed with the Company’s Annual Report on Form 10-KSB for theyear ended December 31, 2001. (6)Incorporated by reference to the comparable exhibit filed with the Company's Annual Report on Form 10-KSB for theyear ended December 31, 2002. (7)Incorporated by reference to the comparable exhibit filed with the Company’s Annual Report on Form 10-KSB for theyear ended December 31, 2004. (8)Incorporated by reference to the comparable exhibit filed with the Company’s Quarterly Report on Form 10-QSB for thequarter ended June 30, 2005. (9)Incorporated by reference to the comparable exhibit filed with the Company’s Current Report on Form 8-K, for theevent 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 August18, 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 yearended December 31, 2008. (13)Incorporated by reference to the comparable exhibit filed with the Company’s Current Report on Form 8-K for the eventdated July 1, 2010 and filed July 2, 2010. 32Source: HUDSON TECHNOLOGIES INC /NY, 10-K, February 28, 2014Powered 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. (14)Incorporated by reference to the comparable exhibit filed with the Company’s Annual Report on Form 10-K for the yearended December 31, 2010. (15)Incorporated by reference to the comparable exhibit filed with the Company’s Quarterly Report on Form-10-Q for thequarter 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 datedJune 22, 2012 and filed June 28, 2012. (17)Incorporated by reference to the comparable exhibit filed with the Company’s Quarterly Report on Form 10-Q for thequarter ended September 30, 2012. (18)Incorporated by reference to the comparable exhibit filed with the Company’s Current Report on Form 8-K for the eventdated 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 yearended December 31, 2009. (20)Incorporated by reference to the comparable exhibit filed with the Company’s Current Report on Form 8-K for the eventdated October 25, 2013 and filed October 31, 2013. (21)Filed herewith. (*)Denotes Management Compensation Plan, agreement or arrangement. 33Source: HUDSON TECHNOLOGIES INC /NY, 10-K, February 28, 2014Powered 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 Firm35Audited Consolidated Financial Statements: · Consolidated Balance Sheets36· Consolidated Statements of Operations37· Consolidated Statements of Stockholders' Equity38· Consolidated Statements of Cash Flows39· Notes to the Consolidated Financial Statements40 34Source: HUDSON TECHNOLOGIES INC /NY, 10-K, February 28, 2014Powered 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 31,2013 and 2012 and the related consolidated statements of operations, stockholders’ equity, and cash flows for the years then ended. Thesefinancial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financialstatements based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free ofmaterial misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financialreporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that areappropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control overfinancial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting theamounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made bymanagement, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis forour opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position ofHudson Technologies, Inc. and Subsidiaries as of December 31, 2013 and 2012, and the results of their operations and their cash flows forthe years then ended in conformity with accounting principles generally accepted in the United States of America. /s/ BDO USA, LLP Stamford, CTFebruary 28, 2014 35Source: HUDSON TECHNOLOGIES INC /NY, 10-K, February 28, 2014Powered 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) See Accompanying Notes to the Consolidated Financial Statements. 36 December 31, 2013 2012 Assets Current assets: Cash and cash equivalents $669 $3,991 Trade accounts receivable - net 3,706 1,956 Income taxes receivable 2,709 122 Inventories 33,967 40,167 Deferred tax asset 207 234 Prepaid expenses and other current assets 608 554 Total current assets 41,866 47,024 Property, plant and equipment, less accumulated depreciation 4,536 4,765 Other assets 106 341 Deferred tax asset 5,363 3,888 Investments in affiliates 440 1,138 Intangible assets, less accumulated amortization 57 76 Total Assets $52,368 $57,232 Liabilities and Stockholders' Equity Current liabilities: Accounts payable and accrued expenses $3,955 $6,219 Accrued payroll 289 661 Short-term debt and current maturities of long-term debt 15,367 12,736 Total current liabilities 19,611 19,616 Long-term debt, less current maturities 4,671 4,920 Total Liabilities 24,282 24,536 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 authorized 150,000; none issued or outstanding 0 0 Common stock, $0.01 par value; shares authorized 50,000,000; issued and outstanding 25,070,386 and 24,124,625 251 241 Additional paid-in capital 44,944 43,722 Accumulated deficit (17,109) (11,267) Total Stockholders' Equity 28,086 32,696 Total Liabilities and Stockholders' Equity $52,368 $57,232 Source: HUDSON TECHNOLOGIES INC /NY, 10-K, February 28, 2014Powered 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 Operations (Amounts in thousands, except for share and per share amounts) See Accompanying Notes to the Consolidated Financial Statements. 37 For the years ended December 31, 2013 2012 Revenues$58,634 $56,447 Cost of sales, excluding lower of cost or market adjustment 44,664 33,905 Lower of cost or market adjustment 14,700 0 Gross profit (loss) (730) 22,542 Operating expenses: Selling and marketing 3,032 2,748 General and administrative 4,723 4,914 Total operating expenses 7,755 7,662 Operating income (loss) (8,485) 14,880 Other income (expense): Interest expense (933) (693) Interest income 0 9 Total other income (expense) (933) (684) Income (loss) before income taxes (9,418) 14,196 Income tax (benefit) expense (3,576) 1,395 Net income (loss)$(5,842) $12,801 Net income (loss) per common share - Basic$(0.24) $0.54 Net income (loss) per common share - Diluted$(0.24) $0.49 Weighted average number of shares outstanding - Basic 24,826,101 23,906,706 Weighted average number of shares outstanding - Diluted 24,826,101 26,353,960 Source: HUDSON TECHNOLOGIES INC /NY, 10-K, February 28, 2014Powered 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) See Accompanying Notes to the Consolidated Financial Statements. 38 Common Stock Additional Accumulated Shares Amount Paid-in Capital Deficit Total Balance at December 31, 2011 23,783,106 $238 $42,869 $(24,068) $19,039 Issuance of common stock in connection with asset purchase 160,305 1 599 0 600 Issuance of common stock upon exercise of stock options andwarrants 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 Issuance of common stock upon exercise of stock options 945,761 10 1,100 0 1,110 Value of share-based arrangements 0 0 122 0 122 Net loss 0 0 0 (5,842) (5,842) Balance at December 31, 2013 25,070,386 $251 $44,944 $(17,109) $28,086 Source: HUDSON TECHNOLOGIES INC /NY, 10-K, February 28, 2014Powered 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) See Accompanying Notes to the Consolidated Financial Statements 39 For the years ended December 31, 2013 2012 Cash flows from operating activities: Net (loss) income $(5,842) $12,801 Adjustments to reconcile net (loss) income to cash used by operating activities: Depreciation and amortization 808 556 Allowance for doubtful accounts 31 29 Amortization of deferred finance cost 95 41 Value of share-based payment arrangements 122 134 Deferred tax benefit (1,448) (1,036) Allowance for lower of cost or market 5,714 0 Changes in assets and liabilities: Trade accounts receivable (1,781) 468 Inventories 486 (22,433) Prepaid and other assets 86 (368) Income taxes receivable (2,587) 0 Accounts payable and accrued expenses (2,101) 542 Cash used by operating activities (6,417) (9,266) Cash flows from investing activities: Additions to patents (11) (19) Additions to property, plant and equipment (550) (1,248) Decrease (increase) in investment in affiliates 164 (730) Cash used by investing activities (397) (1,997) Cash flows from financing activities: Proceeds from issuance of common stock - net 1,110 122 Proceeds of short-term debt - net 2,629 10,527 Proceeds from long-term debt 0 4,387 Repayment of long-term debt (247) (3,740) Cash provided by financing activities 3,492 11,296 (Decrease) increase in cash and cash equivalents (3,322) 33 Cash and cash equivalents at beginning of period 3,991 3,958 Cash and cash equivalents at end of period $669 $3,991 Supplemental disclosure of cash flow information: Cash paid during period for interest $838 $652 Cash paid for income taxes $1,085 $2,553 Non cash investing activity: Divestiture of joint venture $534 $0 Source: HUDSON TECHNOLOGIES INC /NY, 10-K, February 28, 2014Powered 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 providinginnovative solutions to recurring problems within the refrigeration industry. The Company's products and services are primarily used incommercial air conditioning, industrial processing and refrigeration systems, including (i) refrigerant sales, (ii) refrigerant managementservices consisting primarily of reclamation of refrigerants and (iii) RefrigerantSide® Services performed at a customer's site, consisting ofsystem decontamination to remove moisture, oils and other contaminants. In addition, RefrigerantSide® Services include predictive anddiagnostic services for industrial and commercial refrigeration applications, which are designed to predict potential catastrophic problems andidentify inefficiencies in an operating system. The Company’s Chiller Chemistry®, Chill Smart®, Fluid Chemistry®, and PerformanceOptimization are predictive and diagnostic service offerings. As a component of the Company’s products and services, the Company alsoparticipates 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 similarpronouns refer to Hudson Technologies, Inc. and its subsidiaries. In preparing the accompanying consolidated financial statements, and in accordance with ASC855-10 “Subsequent Events”, the Company’smanagement has evaluated 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 suchadjustments were normal and recurring. Consolidation The consolidated financial statements represent all companies of which Hudson directly or indirectly has majority ownership or otherwisecontrols. Significant intercompany accounts and transactions have been eliminated. The Company's consolidated financial statementsinclude the accounts of wholly-owned subsidiaries 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 December31, 2013 and 2012, because of the relatively short maturity of these instruments. The carrying value of short and long-term debtapproximates fair value, based upon quoted market rates of similar debt issues, as of December 31, 2013 and 2012. Credit risk Financial instruments, which potentially subject the Company to concentrations of credit risk, consist principally of temporary cashinvestments and trade accounts receivable. The Company maintains its temporary cash investments in highly-rated financial institutionsand, at times, the balances exceed FDIC insurance coverage. The Company's trade accounts receivables are primarily due from companiesthroughout the United States. The Company reviews each customer's credit history before extending credit. The Company establishes an allowance for doubtful accounts based on factors associated with the credit risk of specific accounts, historicaltrends, and other information. The carrying value of the Company’s accounts receivable is reduced by the established allowance for doubtfulaccounts. The allowance for doubtful accounts includes any accounts receivable balances that are determined to be uncollectible, along witha general reserve for the remaining accounts receivable balances. The Company adjusts its reserves based on factors that affect thecollectability of the accounts receivable balances. For the year ended December 31, 2013, two customers each accounted for 10% or more of the Company’s revenues and, in the aggregatethese two customers accounted for 23% of the Company’s revenues. At December 31, 2013, there were $344,000 in outstandingreceivables from these customers. For the year ended December 31, 2012, two customers each accounted for 10% or more of the Company’s revenues and, in the aggregatethese two customers accounted for 28% of the Company’s revenues. At December 31, 2012, there were no outstanding receivables fromthese customers. 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 orservices by any such customer could have a material adverse effect on the Company's operating results and financial position. 40Source: HUDSON TECHNOLOGIES INC /NY, 10-K, February 28, 2014Powered 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.Where the market price of inventory is less than the related cost, the Company may be required to write down its inventory through a lowerof cost or market adjustment, the impact of which is reflected in cost of sales on the Consolidated Statements of Operations. Any suchadjustment is based on management’s judgment regarding future demand and market conditions and analysis of historical experience. Forthe year ended December 31, 2013, the Company recognized a lower of cost or market adjustment to inventory in the amount of$14,700,000. The LCM inventory adjustment, which significantly increased our cost of sales, was due to an approximately 50% decline inHCFC-22 refrigerant pricing from April to September 2013 following the issuance of the EPA’s final rule in April 2013. Property, plant and equipment Property, plant and equipment are stated at cost, including internally manufactured equipment. The cost to complete equipment that is underconstruction is not considered to be material to the Company's financial position. Provision for depreciation is recorded (for financial reportingpurposes) using the straight-line method over the useful lives of the respective assets. Leasehold improvements are amortized on a straight-line basis over the shorter of economic life or terms of the respective leases. Costs of maintenance and repairs are charged to expense whenincurred. Due to the specialized nature of the Company's business, it is possible that the Company's estimates of equipment useful life periods maychange 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 contractualterms. The Company evaluates each sale to ensure collectability. In addition, each sale is based on an arrangement with the customer andthe sales price to the buyer is fixed. License fees are recognized over the period of the license based on the respective performancemeasurements associated with the license. Royalty revenues are recognized when earned. Cost of sales is recorded based on the cost ofproducts shipped or services performed and related direct operating costs of the Company's facilities. To the extent that the Company chargesits customers shipping fees, such amounts are included as a component of revenue and the corresponding costs are included as acomponent of cost of sales. The Company's revenues are derived from refrigerant and reclamation sales and RefrigerantSide® Services, including license and royaltyrevenues. The revenues for each of these lines are as follows: Income taxes The Company utilizes the asset and liability method for recording deferred income taxes, which provides for the establishment of deferred taxasset or liability accounts based on the difference between tax and financial reporting bases of certain assets and liabilities. The tax benefitassociated with the Company's net operating loss carry forwards (“NOLs”) is recognized to the extent that the Company is expected torecognize future taxable income. The Company assesses the recoverability of its deferred tax assets based on its expectation that it willrecognize future taxable income and adjusts its valuation allowance accordingly. As of December 31, 2013 and 2012, the net deferred taxasset was $6,112,000 and $4,122,000, 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 theCompany utilizes its NOLs, it will not pay tax on such income but may be subject to the federal alternative minimum tax. In addition, to theextent 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 defined by the Internal Revenue Service, the Company’s ability to utilize its existing NOLsis subject to certain annual limitations. Approximately $10,600,000 of the Company’s $16,000,000 of NOLs are subject to annual limitationsof $1,300,000. 41Years Ended December 31, 2013 2012 (in thousands) Refrigerant and reclamation sales $54,293 $52,220 RefrigerantSide® Services 4,341 4,227 Total $58,634 $56,447 Source: HUDSON TECHNOLOGIES INC /NY, 10-K, February 28, 2014Powered 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 a current income tax receivable of $ 2,709,000 at December 31, 2013. This receivable is primarily related to the pre-taxloss for the year ended December 31, 2013. As a result of an Internal Revenue Service audit, the 2006 and prior federal tax years have been closed. The Company operates in manystates throughout the United States and, as of December 31, 2013, the various states’ statutes of limitations remain open for tax yearssubsequent to 2008. The Company recognizes interest and penalties, if any, relating to income taxes as a component of the provision forincome taxes. The IRS recently initiated an examination of the Company’s federal income tax return for the fiscal year 2011. The Company does not expectthe results of this examination to have a material effect on the Company’s financial statements. The Company evaluates uncertain tax positions, if any, by determining if it is more likely than not to be sustained upon examination by thetaxing authorities. As of December 31, 2013 and 2012, 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 areconsidered in the presentation of diluted earnings per share. The reconciliation of shares used to determine net income per share is asfollows (dollars in thousands): During the year ended December 31, 2013 and 2012, certain options and warrants aggregating 3,760,161 and no shares, respectively, havebeen excluded from 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 requiresmanagement to make estimates and assumptions that affect reported amounts of certain assets and liabilities, the disclosure of contingentassets and liabilities, and the results of operations 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 andcontingencies. In the event 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 itsestimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the resultsof which form the basis for making judgments about the carrying values of assets and liabilities. Actual results may differ from theseestimates under different assumptions or conditions. To the extent 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 notlimited to, those estimates related to its allowance for doubtful accounts, inventory reserves, and valuation allowance for the deferred taxassets relating to its NOLs and commitments and contingencies. With respect to accounts receivable, the Company estimates thenecessary 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 writedown of inventory to net realizable value is necessary. In determining the Company’s valuation allowance for its deferred tax assets, theCompany assesses its ability to generate taxable income in the future. 42 Years Ended December 31, 2013 2012 Net (loss) income $(5,842) $12,801 Weighted average number of shares – basic 24,826,101 23,906,706 Shares underlying warrants 0 315,494 Shares underlying options 0 2,131,760 Weighted average number of shares outstanding – diluted 24,826,101 26,353,960 Source: HUDSON TECHNOLOGIES INC /NY, 10-K, February 28, 2014Powered 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 participates in an industry that is highly regulated, and changes in the regulations affecting our business could affect ouroperating results. Currently the Company purchases virgin, hydro chlorofluorocarbon (“HCFC”) and hydro fluorocarbon (“HFC”) refrigerantsand 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 refrigerants and limited the production of virgin HCFC refrigerants. Effective January 2004, the Act further limited the production of virgin HCFC refrigerants and federal regulations were enacted whichestablished production and consumption allowances for HCFC refrigerants and which imposed limitations on the importation of certain virginHCFC refrigerants. Under the Act, production of certain virgin HCFC refrigerants is scheduled to be phased out during the period 2010through 2020, and production of all virgin HCFC refrigerants is scheduled to be phased out by 2030. Additionally, effective January 1, 2010,the Act further limited the production of virgin HCFC refrigerants, and additional federal regulations have been enacted which imposed furtherlimitation and a phase down on the use, production and importation of virgin HCFC refrigerants for the years 2010 through 2014. As a resultof litigation, the federal regulations implementing the January 2010 phase down schedule were vacated, and in April 2013, theEnvironmental Protection Agency (“EPA”) published a final rule providing for further reduction in the production of HCFC refrigerants whencompared to the reductions established in the January 1, 2010 published rule. The final rule allows for the production or importation of 63million and 51 million pounds of HCFC-22 in 2013 and 2014, respectively. The EPA has not yet issued a proposed or final rule establishingthe total pounds of HCFC-22 that can be produced or imported during the years 2015 through 2019. To the extent that the Company is unable to source sufficient quantities of refrigerants or is unable to obtain refrigerants on commerciallyreasonable terms or experiences a decline in demand and/or price for refrigerants sold by the Company, the Company could realize reductionsin revenue from refrigerant sales, which could have a material adverse effect on its operating results and its financial position. The Company is subject to various legal proceedings. The Company assesses the merit and potential liability associated with each of theseproceedings. In addition, the Company estimates potential liability, if any, related to these matters. To the extent that these estimates are notaccurate, or circumstances change in the future, the Company could realize liabilities, which could have a material adverse effect onits 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 ofan asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of theassets to the future net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to berecognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to bedisposed of are reported at the lower of the carrying amount or fair value less the cost to sell. Recent accounting pronouncements In March 2013, the FASB issued ASU No. 2013-05, which amends the guidance in ASC 830, “Foreign Currency Matters”. ASU No. 2013-05 addresses the accounting for the cumulative translation adjustment (“CTA”) when a parent either sells a part or all of its investment in aforeign entity or no longer holds a controlling financial interest in a subsidiary or group of assets that is a nonprofit activity or a businesswithin a foreign entity. This amended guidance is to be applied prospectively and is effective for the Company beginning on January 1,2014. The implementation of the amended accounting guidance is not expected to have a material impact on our consolidated financialposition or results of operations. In July 2013, the FASB issued ASU 2013-11, "Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a NetOperating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists." ASU 2013-11 requires an entity to present anunrecognized tax benefit, or a portion of an unrecognized tax benefit, in the financial statements as a reduction to a deferred tax asset for a netoperating loss carryforward, a similar tax loss, or a tax credit carryforward, except as follows. To the extent a net operating loss carryforward, asimilar tax loss, or a tax credit carryforward is not available at the reporting date under the tax law of the applicable jurisdiction to settle anyadditional income taxes that would result from the disallowance of a tax position or the tax law of the applicable jurisdiction does not requirethe entity to use, and the entity does not intend to use, the deferred tax asset for such purpose, the unrecognized tax benefit should bepresented in the financial statements as a liability and should not be combined with deferred tax assets. The amendments in this Update areeffective for fiscal years (and interim periods within those years) beginning after December 15, 2013. The adoption of ASU 2013-11 is notexpected to have a material impact on our results of operations or our financial position. Reclassification Certain items in the 2012 financial statements have been reclassified for comparative purposes. 43Source: HUDSON TECHNOLOGIES INC /NY, 10-K, February 28, 2014Powered 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 2 - Other income For the year ended December 31, 2013 there was no other income. For the year ended December 31, 2012, other income of $9,000consisted primarily of miscellaneous income. Note 3 - Income taxes Income tax benefit for the year ended December 31, 2013 was $3,576,000 compared to an income tax provision for the year endedDecember 31, 2012 of $1,395,000. The income tax benefit of $3,576,000 was for federal and state income tax at statutory rates applied to thepre-tax loss for the year ended December 31, 2013 of $9,418,000. During the year ended December 31, 2012, the Company recognized $5,395,000 in federal and state income tax expense at statutory ratesoffset by the release during the fourth quarter of 2012 of $4,000,000 of the Company’s deferred tax asset valuation allowance. In futureperiods, the Company will be subject to federal and state income tax expense at statutory tax rates. The following summarizes the (benefit) / provision for income taxes: Reconciliation of the Company's actual tax rate to the U.S. Federal statutory rate is as follows: As of December 31, 2013, the Company had NOL's of approximately $16,000,000 expiring through 2033, of which $10,600,000, aresubject to an annual limitation of $1,300,000. Elements of deferred income tax assets (liabilities) are as follows: 44Years Ended December 31, 2013 2012 (in thousands) Current: Federal $(1,904) $1,846 State and local (224) 585 (2,128) 2,431 Deferred: Federal (1,295) (927) State and local (153) (109) (1,448) (1,036) (Benefit) / Provision for income taxes $(3,576) $1,395 Years ended December 31, 2013 2012 Income tax rates - Statutory U.S. federal rate 34% 34%- States, net U.S. benefits 4% 4%- Reduction of valuation allowance 0% (28)%Total 38% 10%December 31, 2013 2012 (in thousands) Deferred tax assets (liabilities) - Depreciation & amortization $(542) $(112) - Reserves for doubtful accounts 86 86 - Inventory reserve 120 148 - NOL 5,906 4,000 Total $5,570 $4,122 Source: HUDSON TECHNOLOGIES INC /NY, 10-K, February 28, 2014Powered 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 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 of theseassets prior to their expiration. Note 4 - Trade accounts receivable - net At December 31, 2013 and 2012, trade accounts receivable are net of reserves for doubtful accounts of $227,000 and $227,000, respectively.Note 5- Inventories Inventories consist of the following: Note 6 - Property, plant and equipment Elements of property, plant and equipment are as follows: Depreciation expense for the years ended December 31, 2013 and 2012 was $779,000 and $524,000, respectively.Note 7 - Short-term and long-term debt Elements of short-term and long-term debt are as follows: 45December 31, 2013 2012 (in thousands) Refrigerant and cylinders $8,238 $9,893 Packaged refrigerants 25,729 30,274 Total $33,967 $40,167 December 31, 2013 2012 Estimated Lives (in thousands) Property, plant and equipment - Land $535 $535 - Buildings 830 830 39 years - Building improvements 776 770 39 years - Equipment 8,560 8,253 3-7 years - Equipment under capital lease 137 231 5-7 years - Vehicles 1,258 1,212 5 years - Lab and computer equipment, software 2,210 2,017 3-5 years - Furniture & fixtures 249 246 7-8 years - Leasehold improvements 70 40 3 years - Equipment under construction 37 96 Subtotal 14,662 14,230 Accumulated depreciation 10,126 9,465 Total $4,536 $4,765 December 31, 2013 2012 (in thousands) Short-term & long-term debt Short-term debt: - Bank credit line $15,080 $12,451 - Long-term debt: current 287 285 Subtotal 15,367 12,736 Long-term debt: - Bank credit line 4,000 4,000 - Building and land mortgage 603 764 - Vehicle and equipment loans 298 327 - Capital lease obligations 57 114 - Less: current maturities (287) (285) Subtotal 4,671 4,920 Total short-term & long-term debt $20,038 $17,656 Source: HUDSON TECHNOLOGIES INC /NY, 10-K, February 28, 2014Powered 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. Bank Credit Line On June 22, 2012, a subsidiary of Hudson entered into a Revolving Credit, Term Loan and Security Agreement (the “PNC Facility”) withPNC 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 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 a borrowing base that is calculated based on theoutstanding amount of Hudson’s eligible receivables and eligible inventory, as described in the PNC Facility. On February 15, 2013, thePNC Facility was amended. As a result of this amendment, Hudson may borrow up to a maximum of $40,000,000 consisting of a termloan in the principal amount of $4,000,000 and revolving loans in a maximum amount up to $36,000,000. Amounts borrowed under thePNC Facility may be used by Hudson for working capital needs and to reimburse drawings under letters of credit. Fees and expenses relating tothe creation of the PNC Facility of approximately $150,000 are being amortized over the life of the loan. At December 31, 2013, total borrowings underthe PNC Facility were $19,080,000, and there was $8,349,000 available to borrow under the revolving line of credit. The effective interestrate under the PNC Facility was 3.0% at December 31, 2013. 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 thedomestic rate (as set forth in the PNC Facility) and at the end of each interest period with respect to loans bearing interest at the Eurodollarrate (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) eachthree months from the commencement of such Eurodollar rate loan or (b) the end of the interest period. As of December 31, 2013, interestcharges with respect to loans are computed on the actual principal amount of loans outstanding during the month at a rate per annum equalto (A) with respect to domestic rate loans, the sum of (i) a rate per annum equal to the higher of (1) the base commercial lending 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 sumof the Eurodollar rate plus 2.75%. Hudson granted to PNC, for itself, and as agent for such other lenders as may thereafter become a lender under the PNC Facility, a securityinterest in Hudson’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 paydividends on common stock or preferred stock, and also includes certain events of default, including payment defaults, breaches ofrepresentations and warranties, covenant defaults, cross-defaults to other obligations, events of bankruptcy and insolvency, certain ERISAevents, judgments in excess of specified amounts, impairments to guarantees and a change of control. 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, testedquarterly on a rolling twelve month basis. Fixed Charge Coverage Ratio is defined in the PNC Facility, with respect to any fiscal period, asthe ratio of (a) EBITDA of Hudson for such period, minus unfinanced capital expenditures (as defined in the PNC Facility) made by Hudsonduring such period, minus the aggregate amount of cash taxes paid by Hudson during such period, minus the aggregate amount ofdividends and distribution made by Hudson during such period, minus the aggregate amount of payments made with cash by Hudson tosatisfy soil sampling and reclamation related to environmental cleanup at the Company’s former Hillburn, NY facility during such period (tothe extent not already included in the calculation of EBITDA as determined by the Agent) to (b) the aggregate amount of all principal paymentsdue and/or made, except principal payments related to outstanding revolving advances with regard to all funded debt (as defined in the PNCFacility) 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 suchperiod, plus (iii) amortization expenses for such period, plus (iv) non-cash charges. On October 25, 2013, we entered into the Second Amendment to the PNC Facility (the “Second PNC Amendment”), which among otherthings, waived our requirement to comply with the minimum fixed charge coverage ratio covenant of 1.10 to 1.00 for the fiscal quarter endedSeptember 30, 2013, required under the PNC Facility. The covenant waiver was required primarily because of the adverse impact on ourresults of operations from the significant reduction in the selling price of HCFC-22 following the EPA’s final ruling allowing for the productionor importation of 63 million and 51 million pounds of HCFC-22 in 2013 and 2014, respectively. The amendment suspended the minimum fixed charge ratio covenant until the quarterly period ending March 31, 2015 and set theminimum EBITDA for the quarters ended December 31, 2013 through December 31, 2014, as follows: 46Source: HUDSON TECHNOLOGIES INC /NY, 10-K, February 28, 2014Powered 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. After giving effect to the Second PNC Amendment, as of December 31, 2013, the Company was in compliance with the EBITDA covenant.EBITDA for the 3 month period ended December 31, 2013 was ($2,010,000), which was in compliance with the amended EBITDAcovenant for the period of ($2,154,000) by $144,000. The EBITDA was calculated as follows: EBITDA, which represents a non-GAAP measurement of certain financial results, does not represent and should not be considered as analternative to net income or cash provided by operating activities as determined by GAAP. We make no representation or assertion thatEBITDA is indicative of our cash provided by operating activities or results of operations. We have provided a reconciliation of the net loss toEBITDA solely for the purpose of complying with SEC regulations and not as an indication that EBITDA is a substitute measure for incomefrom operations. After giving effect to the Second PNC Amendment, the Company was in compliance with all covenants, as amended, required under the PNCFacility as of December 31, 2013. The Company’s ability to comply with these covenants in future quarters may be affected by eventsbeyond the Company’s control, including general economic conditions, weather conditions, regulations and refrigerant pricing. Although weexpect to remain in compliance with all covenants in the PNC Facility, as amended, depending on our future operating performance andgeneral economic conditions, we cannot make any assurance that we will continue to be in compliance. The amendment redefines the “Revolving Interest Rate” as well as the “Term Loan Rate” as previously defined in the agreement as follows: “Revolving Interest Rate” shall mean an interest rate per annum equal to (a) the sum of the Alternate Base Rate plus one percent (1.00%)with respect to Domestic Rate Loans and (b) the sum of the Eurodollar Rate plus two and three quarters of one percent (2.75%) with respectto the Eurodollar Rate. “Term Loan Rate” shall mean an interest rate per annum equal to (a) the sum of the Alternate Base Rate plus one percent (1.00%) withrespect to the Domestic Rate Loans and (b) the sum of the Eurodollar Rate plus two and three quarters of one percent (2.75%) with respect toEurodollar Rate Loans. The commitments under the PNC Facility will expire and the full outstanding principal amount of the loans, together with accrued andunpaid interest, are due and payable in full on June 22, 2015, unless the commitments are terminated and the outstanding principal amountof the loans are accelerated sooner following 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 buildinglocated in Champaign, Illinois. At December 31, 2013 the principal balance of this mortgage note was $603,000. Vehicle and Equipment Loans The Company had entered into various vehicle and equipment loans. These loans are payable in 60 monthly payments through March2017 and bear interest ranging from 2.9% to 8.9%. Scheduled maturities of the Company's long-term debt and capital lease obligations are as follows: 47Period Amount 3 month period ended December 31, 2013 $(2,154,000) 3 month period ending March 31, 2014 $494,000 6 month period ending June 30, 2014 $2,035,000 9 month period ending September 30, 2014 $3,012,000 12 month period ending December 31, 2014 $1,879,000 For the 3 months ending December 31, 2013 Net loss $(1,530,000) less: income tax benefit (934,000) Loss before income taxes (2,464,000) less: interest expense 246,000 less: depreciation and amortization 208,000 Earnings before interest, taxes, depreciation, and amortization $(2,010,000) Source: HUDSON TECHNOLOGIES INC /NY, 10-K, February 28, 2014Powered 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 $60,000 at December 31, 2013 under leases which have beenclassified as capital leases. Scheduled future minimum lease payments under capital leases net of interest are as follows: Note 8 - Stockholders' equity On August 5, 2009, the Company sold 1,470,000 shares of its common stock at $1.15 per share and received net proceeds of approximately$1,400,000 in a Registered Direct Offering (the “2009 Offering”). The placement agent for the 2009 Offering, received a warrant to purchase73,500 shares of common stock at an exercise price of $1.4375 per share. The estimated fair value of the warrant was approximately$48,000 and such warrant was charged to additional paid-in capital as compensation expense. 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 commonstock and warrants to purchase 1,368,750 shares, at a price of $2.00 per unit in a registered direct offering (the “2010 Offering”). Thewarrants issued as part of the 2010 Offering have an exercise price of $2.60 per share and are exercisable for a five-year period, whichcommenced on January 7, 2011. The net proceeds pursuant to the 2010 Offering were approximately $4,900,000. The value of theaggregate number of warrants issued pursuant to the 2010 Offering was approximately $1,300,000 and such amount was charged as acomponent 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 priceof $0.60 per share, 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 holdersof 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 theCompany recognized $74,000 in general and administrative expenses for this service. 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, inconnection with the Company’s purchase from EffTec’s subsidiary of its proprietary Efftrack™ software. Additionally, the Company alsoissued 26,716 shares of its common stock, at a price of $3.743 per share in payment for services performed by the Company’s advisors. Thefair value of these shares of $100,000 was included as a cost of the software.Note 9 - Commitments and contingencies Rents and operating leases Hudson utilizes leased facilities and operates equipment under non-cancelable operating leases through August 31, 2018 as follows: 48Years ended December 31, Amount (in thousands) - 2014 $287 - 2015 4,284 - 2016 274 - 2017 113 Total $4,958 Years ended December 31, Amount (in thousands) - 2014 $32 - 2015 22 - 2016 6 60 Less interest expense (3) Total $57 Source: HUDSON TECHNOLOGIES INC /NY, 10-K, February 28, 2014Powered 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. Properties The Company rents properties and various equipment under operating leases. Rent expense for the years ended December 31, 2013 and2012 totaled approximately $650,000 and $650,000, respectively. In addition to the properties above, the Company does at times utilizepublic warehouse space on a month to month basis. The Company typically enters into short-term leases for the facilities and whereverpossible extends the expiration date of such leases. Future commitments under operating leases are summarized as follows: 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 leasedfacility in Hillburn, NY (the “Hillburn Facility”), which the Company vacated in June 2006. A failed hose connection to one of the Company'soutdoor storage tanks allowed liquid R-11 refrigerant (“R-11”) to discharge from the tank into the concrete secondary containment area inwhich the subject tank was located. Between April 1999 and May 1999, with the approval of the New York State Department of Environmental Conservation (“DEC”), theCompany constructed and put into operation a remediation system to remove R-11 levels in the groundwater under and around the HillburnFacility. In September 2000, the Company signed an Order on Consent with the DEC, which was amended in May 2001, whereby the Companyagreed to operate the remediation system and perform monthly testing at the Hillburn Facility until remaining groundwater contaminationhas been effectively abated. In July 2005, the DEC approved a modification of the Order on Consent to reduce the frequency of testing frommonthly to quarterly. Additionally, in March 2013, the DEC approved a further modification of the Order on Consent to modify the operationof the remediation system and to further reduce the frequency and scope of testing. The Company is continuing to operate the remediationsystem pursuant to the approved modifications to that Order on Consent. Based upon the most recent modifications to the Order onConsent, as of December 31, 2013, the Company accrued, as an expense in its consolidated financial statements, the costs that theCompany believes it will incur in connection with its compliance with the Order of Consent through December 31, 2018. There can be noassurance that additional testing will not be required or that the Company will not incur additional costs and such costs in excess of theCompany’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 United States Environmental Protection Agency(“EPA”) for listing on the National Priorities List (“NPL”) pursuant to the Comprehensive Environmental Response, Compensation andLiability Act of 1980 (“CERCLA”). The Company submitted opposition to the listing within the sixty-day comment period. In September2003, the EPA advised the Company that it has no current plans to finalize the process for listing of the Hillburn Facility on the NPL and thatthe 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. 49Location Annual Rent Lease Expiration Date Auburn, Washington $27,000 Month to Month Baton Rouge, Louisiana $15,000 2/2015 Champaign, Illinois $327,000 12/2014 Charlotte, North Carolina $62,000 3/2016 Hampstead, New Hampshire $28,000 8/2017 Pearl River, New York $93,000 8/2018 Pottsboro, Texas $18,000 8/2014 Stony Point, NY $116,000 6/2016 Tulsa, Oklahoma $26,000 12/2014 Years ended December 31, Amount (in thousands) - 2014 $785 - 2015 315 -2016 202 -2017 124 -2018 70 Total $1,496 Source: HUDSON TECHNOLOGIES INC /NY, 10-K, February 28, 2014Powered 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. During the years ended December 31, 2013 and 2012, the Company incurred $100,000 and $102,000, respectively, in additionalremediation costs in connection with the matters above. There can be no assurance that the ultimate outcome of the 1999 Release will nothave a material adverse effect on the Company's financial condition and results of operations. There can be no assurance that the EPA willnot change its current plans and seek to finalize the process of listing the Hillburn Facility on the NPL, or that the ultimate outcome of such alisting will not have a material adverse effect on the Company's financial 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 isautomatically renewable for successive two-year terms unless either party gives notice of termination at least ninety days prior to the thenexpiration date of the then current term. Pursuant to the agreement, Mr. Zugibe is receiving an annual base salary of $288,500 with suchincreases and bonuses as the Company’s Board of Directors may determine. The Company is the beneficiary of a "key-man" insurancepolicy 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 and directors. Share-based compensation is measured at grant date, based on the estimated aggregate fair value of the award on thegrant date, and such amount is charged to compensation expense on a straight-line basis (net of estimated forfeitures) over the requisiteservice period. For the years ended December 31, 2013 and 2012, the share-based compensation expense of $122,000 and $134,000,respectively, is reflected in general and administrative expenses in the consolidated income statements. Share-based awards have historically been stock options issued pursuant to the terms of the Company’s 1994 and 1997 stock option plansand the Company’s 2004 and 2008 stock incentive plans, (collectively, the “Plans”), described below. The Plans may be administered by theBoard of Directors or the Compensation Committee of the Board or by another committee appointed by the Board from among its membersas provided in the Plans. Presently, the Plans are administered by the Company’s Compensation Committee of the Board of Directors. TheCompensation Committee has delegated authority to the Company’s Chief Executive Officer to grant stock options under the Company’s 2004 and 2008 stockincentive plans to employees who are not executive officers of up to a maximum of 10,000 shares per employee and up to an aggregate of 50,000 shares peryear. As of December 31, 2013, the Plans authorized the issuance of stock options to purchase 5,500,000 shares of the Company’s commonstock and, as of December 31, 2013 there were 2,636,470 shares of the Company’s common stock available for issuance for future stockoption 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 atan exercise price equal to the Company’s stock price at the date of grant. Typically, the Company’s stock option awards have generally vestedfrom immediately to two years from the grant date and have had a contractual term ranging from five to ten years For the years ended December 31, 2013 and 2012, the Company issued 173,354 and 30,843 options, respectively. As of December 31,2013, there was $83,000 of unrecognized 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 ofcommon stock were reserved for issuance upon the exercise of options designated as either (i) options intended to constitute incentive stockoptions (“ISOs”) under the Internal Revenue Code of 1986, as amended (“Code”), or (ii) nonqualified options. ISOs could be granted underthe 1994 Plan to employees and officers of the Company. Non-qualified options could be granted to consultants, directors (whether or notthey are employees), employees or officers of the Company. Effective November 1, 2004, the Company’s ability to grant options under the1994 Plan expired. Effective July 25, 1997, the Company adopted its 1997 Employee Stock Option Plan, which was amended on August 19, 1999, (“1997Plan”) pursuant to 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 to consultants, directors (whether or not they are employees), employees or officers of the Company. Stock appreciation rights could also be issued in tandem with stock options. Effective June 11, 2007, the Company’s ability to grant optionsor stock appreciation rights under the 1997 Plan expired. Effective September 10, 2004, the Company adopted its 2004 Stock Incentive Plan (“2004 Plan”) pursuant to which 2,500,000 shares ofcommon stock were reserved for issuance upon the exercise of options, designated as either (i) ISOs under the Code, or (ii) nonqualifiedoptions, restricted stock, deferred stock or other stock-based awards. ISOs may be granted under the 2004 Plan to employees and officers ofthe 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 the Company. Stock appreciation rights may also be issued in tandem withstock options. Unless the 2004 Plan is sooner terminated, the ability to grant options or other awards under the 2004 Plan will expire onSeptember 10, 2014. 50Source: HUDSON TECHNOLOGIES INC /NY, 10-K, February 28, 2014Powered 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. 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 (or110% of fair market value in the case of persons holding 10% or more of the voting stock of the Company). Nonqualified options grantedunder the 2004 Plan may not be granted at a price less than the fair market value of the common stock. Options granted under the 2004Plan expire not more than ten years from the date of grant (five years in the case of ISOs granted to persons holding 10% or more of thevoting 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 ofcommon stock were reserved for issuance upon the exercise of options, designated as either (i) ISOs under the Code, or (ii) nonqualifiedoptions, restricted stock, deferred stock or other stock-based awards. ISOs may be granted under the 2008 Plan to employees and officers ofthe 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 the Company. Stock appreciation rights may also be issued in tandem withstock options. Unless the 2008 Plan is sooner terminated, the ability to grant options or other awards under the 2008 Plan will expire onAugust 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 (or110% of fair market value in the case of persons holding 10% or more of the voting stock of the Company). Nonqualified options grantedunder the 2008 Plan may not be granted at a price less than the fair market value of the common stock. Options granted under the 2008Plan expire not more than ten years from the date of grant (five years in the case of ISOs granted to persons holding 10% or more of thevoting 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 dateof 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 isincorporating the simplified method to compute expected lives of share based awards with the following weighted-average assumptions: A summary of the status of the Company's Plans as of December 31, 2013 and 2012 and changes for the periods ending on those dates ispresented below: The following is the weighted average contractual life in years and the weighted average exercise price at December 31, 2013 of: 51Years Ended December 31, 2013 2012 Assumptions Dividend yield 0%0%Risk free interest rate .85% - 1.64%1.0%Expected volatility 59% - 76%73%Expected lives 5 years 5 years Stock Option Plan Totals Shares Weighted Average Exercise Price 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 • Cancelled (58,617) $1.87 • Exercised (945,761) $1.20 • Granted 173,354 $2.59 Outstanding at December 31, 2013 2,517,911 $1.33 Weighted Average Number of Remaining Weighted Average Options Contractual Life Exercise Price Options outstanding 2,517,911 4.7 years $1.33 Options vested 2,470,411 4.7 years $1.28 Source: HUDSON TECHNOLOGIES INC /NY, 10-K, February 28, 2014Powered 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 intrinsic value at December 31, 2013 of: The intrinsic value of options exercised during the year ended December 31, 2012 was $267,000. The following is the weighted average fair value for the twelve month period ended December 31, 2013 of: 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-BinottiAssociates (“BB”). The joint venture created a new entity known as Hudson Technologies Europe, S.r.l. (“HTE”). As of December 31, 2013,the Company has divested itself of this joint venture. This divestiture did not have a material impact on the Company’s results of operations. 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 suppressants throughout North America and Mexico. As ofDecember 31, 2013, the Company has made an investment of $440,000. Operations of the joint venture through December 31, 2013, have beenimmaterial. 52Options outstanding $6,030,482 Options vested in 2013 $115,304 Options exercised in 2013 $2,816,000 Options granted $2.59 Options vested $2.27 Source: HUDSON TECHNOLOGIES INC /NY, 10-K, February 28, 2014Powered 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 onits behalf by the undersigned, thereunto duly authorized. HUDSON TECHNOLOGIES, INC. By:/s/ Kevin J. Zugibe Kevin J. Zugibe, Chairman and Chief Executive Officer Date:February 28, 2014 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf ofthe registrant and in the capacities and on the dates indicated. Signature Title Date /s/ Kevin J. Zugibe Chairman of the Board and Chief Executive Officer (Principal February28,2014 Kevin J. Zugibe Executive Officer) /s/ James R. Buscemi Chief Financial Officer (Principal Financial and Accounting February28,2014 James R. Buscemi Officer) /s/ Vincent P. Abbatecola Director February28,2014 Vincent P. Abbatecola /s/ Brian F. Coleman Director and President and Chief Operating Officer February28,2014 Brian F. Coleman /s/ Dominic J. Monetta Director February28,2014 Dominic J. Monetta /s/ Otto C. Morch Director February28,2014 Otto C. Morch 53Source: HUDSON TECHNOLOGIES INC /NY, 10-K, February 28, 2014Powered 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 uponissuance. (7)10.6 Form of Incentive Stock Option Agreement under the 2004 Stock Incentive Plan of the Company with options vesting inequal quarterly installments 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 uponissuance. (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 installmentsover two year period. (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 equalinstallments over two year 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 asborrower and PNC 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) 54Source: HUDSON TECHNOLOGIES INC /NY, 10-K, February 28, 2014Powered 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. 10.28 $4,000,000 Term Note, dated June 22.2012, by Hudson Technologies Company as borrower in favor of PNC. (16)10.29 Guaranty & Suretyship Agreement, dated June 22, 2012, made by Hudson Holdings, Inc. as guarantor on behalf ofHudson Technologies Company. (16)10.30 Guaranty & Suretyship Agreement, dated June 22, 2012, made by the Company as guarantor on behalf of HudsonTechnologies Company. (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 Companyand 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 andPNC dated February 15, 2013. (18)10.35 $36,000,000 Amended and Restated Revolving Credit Note, dated February 15, 2013, by Hudson Technologies Companyas borrower in favor of PNC. (18)10.36 Guarantors’ Ratification dated February 15, 2013, by the Company and Hudson Holdings, Inc. (18)10.37 Second Amendment to Revolving Credit, Term Loan and Security Agreement Between Hudson Technologies Companyand PNC Bank, National Association dated October 25, 2013 (20)10.38 Guarantors’ Ratification dated October 25, 2013 by Hudson Technologies, Inc. and Hudson Holdings, Inc. (20)10.39 Amendment No. 1 to the Hudson Technologies, Inc. 2004 Stock Incentive Plan adopted October 22, 2013. (21) *10.40 Amendment No. 1 to the Hudson Technologies, Inc. 2008 Stock Incentive Plan adopted October 22, 2013. (21) *14 Code of Business Conduct and Ethics. (9)21 Subsidiaries of the Company. (21)23.1 Consent of BDO USA, LLP. (21)31.1 Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (21)31.2 Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (21)32.1 Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 ofSarbanes-Oxley Act of 2002. (21)32.2 Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 ofSarbanes-Oxley Act of 2002. (21)101 Interactive data file pursuant to Rule 405 of Regulation S-T.(21)______ (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 thequarter ended June 30, 1999.(3) Incorporated by reference to the comparable exhibit filed with the Company's Annual Report on Form 10-KSB for the yearended December 31, 1999.(4) Incorporated by reference to the comparable exhibit filed with the Company's Annual Report on Form 10-KSB for the yearended December 31, 2000. (5) Incorporated by reference to the comparable exhibit filed with the Company’s Annual Report on Form 10-KSB for the yearended December 31, 2001.(6) Incorporated by reference to the comparable exhibit filed with the Company's Annual Report on Form 10-KSB for the yearended December 31, 2002.(7) Incorporated by reference to the comparable exhibit filed with the Company’s Annual Report on Form 10-KSB for the yearended December 31, 2004.(8) Incorporated by reference to the comparable exhibit filed with the Company’s Quarterly Report on Form 10-QSB for thequarter ended June 30, 2005.(9) Incorporated by reference to the comparable exhibit filed with the Company’s Current Report on Form 8-K, for the eventdated 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 yearended December 31, 2008.(13) Incorporated by reference to the comparable exhibit filed with the Company’s Current Report on Form 8-K for the eventdated July 1, 2010 and filed July 2, 2010. 55Source: HUDSON TECHNOLOGIES INC /NY, 10-K, February 28, 2014Powered 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. (14) Incorporated by reference to the comparable exhibit filed with the Company’s Annual Report on Form 10-K for the yearended December 31, 2010.(15) Incorporated by reference to the comparable exhibit filed with the Company’s Quarterly Report on Form-10-Q for the quarterended 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 June22, 2012 and filed June 28, 2012.(17) Incorporated by reference to the comparable exhibit filed with the Company’s Quarterly Report on Form 10-Q for the quarterended September 30, 2012.(18) Incorporated by reference to the comparable exhibit filed with the Company’s Current Report on Form 8-K for the eventdated 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 yearended December 31, 2009.(20) Incorporated by reference to the comparable exhibit filed with the Company’s Current Report on Form 8-K for the eventdated October 25, 2013 and filed October 31, 2013.(21) Filed herewith. (*) Denotes Management Compensation Plan, agreement or arrangement. 56 Source: HUDSON TECHNOLOGIES INC /NY, 10-K, February 28, 2014Powered 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 10.39: AMENDMENT NO. 1 TO THEHUDSON TECHNOLOGIES, INC. 2004 STOCK INCENTIVE PLAN THIS AMENDMENT NO. 1 TO THE HUDSON TECHNOLOGIES, INC. 2004 STOCK INCENTIVE PLAN has been adopted by the Board ofDirectors (the “Board”) of Hudson Technologies, Inc., a New York corporation (the “Company”), on October 22, 2013, to be effective as of such date. WHEREAS, the Company’s 2004 Stock Incentive Plan (the “Plan”) was adopted by the Board in 2004; WHEREAS, pursuant to Section 10 of the Plan, the Board has approved the amendment set forth below. NOW, THEREFORE, the Plan is hereby amended, effective as of the date hereof, as follows: 1.Amendment. The Plan is hereby amended by the addition of the following paragraph to Section 2: “The Committee, in its discretion, may delegate to one or more officers of the Company all or part of the Committee’s authority and duties withrespect to grants and awards (i) to individuals who are not subject to the reporting and other provisions of Section 16 of the Securities Exchange Act of 1934,as amended, and (ii) that are not intended to qualify as “performance-based compensation” for purposes of Code Section 162(m). The Committee may revokeor amend the terms of a delegation at any time but such action shall not invalidate any prior actions of the Committee’s delegate or delegates that were consistentwith the terms of the Plan.” 2.No Other Changes. Except as set forth herein, all other terms and provisions of the Plan remain in full force and effect. Source: HUDSON TECHNOLOGIES INC /NY, 10-K, February 28, 2014Powered 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 10.40: AMENDMENT NO. 1 TO THEHUDSON TECHNOLOGIES, INC. 2008 STOCK INCENTIVE PLAN THIS AMENDMENT NO. 1 TO THE HUDSON TECHNOLOGIES, INC. 2008 STOCK INCENTIVE PLAN has been adopted by the Board ofDirectors (the “Board”) of Hudson Technologies, Inc., a New York corporation (the “Company”), on October 22, 2013, to be effective as of such date. WHEREAS, the Company’s 2008 Stock Incentive Plan (the “Plan”) was adopted by the Board in 2008; WHEREAS, pursuant to Section 20 of the Plan, the Board has approved the amendment set forth below. NOW, THEREFORE, the Plan is hereby amended, effective as of the date hereof, as follows: 1.Amendment. The Plan is hereby amended by the addition of the following Section 2(d): “(d) The Committee, in its discretion, may delegate to one or more officers of the Company all or part of the Committee’s authority and duties withrespect to grants and awards (i) to individuals who are not subject to the reporting and other provisions of Section 16 of the Exchange Act, and (ii) that are notintended to qualify as “performance-based compensation” for purposes of Code Section 162(m). The Committee may revoke or amend the terms of adelegation at any time but such action shall not invalidate any prior actions of the Committee’s delegate or delegates that were consistent with the terms of thePlan.” 2.No Other Changes. Except as set forth herein, all other terms and provisions of the Plan remain in full force and effect. Source: HUDSON TECHNOLOGIES INC /NY, 10-K, February 28, 2014Powered 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 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, February 28, 2014Powered 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 February 28, 2014 relating to the consolidated financial statements, which appears in this Form 10-K. /s/ BDO USA, LLP Stamford, CTFebruary 28, 2014 Source: HUDSON TECHNOLOGIES INC /NY, 10-K, February 28, 2014Powered 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:February 28, 2014 /s/ Kevin J. Zugibe Kevin J. Zugibe Chief Executive Officer and Chairman of the Board Source: HUDSON TECHNOLOGIES INC /NY, 10-K, February 28, 2014Powered 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:February 28, 2014 /s/ James R. Buscemi James R. Buscemi Chief Financial Officer Source: HUDSON TECHNOLOGIES INC /NY, 10-K, February 28, 2014Powered 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, 2013as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Kevin J. Zugibe, as Chief Executive Officer andChairman of the Board of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to 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 February 28, 2014 Source: HUDSON TECHNOLOGIES INC /NY, 10-K, February 28, 2014Powered 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 ended December 31, 2013as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, James R. Buscemi, as Chief Financial Officer ofthe Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to thebest 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 February 28, 2014 Source: HUDSON TECHNOLOGIES INC /NY, 10-K, February 28, 2014Powered 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, February 28, 2014Powered 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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