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What changed in UNITED GUARDIAN INC's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of UNITED GUARDIAN INC's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+185 added−167 removedSource: 10-K (2025-03-21) vs 10-K (2024-03-22)

Top changes in UNITED GUARDIAN INC's 2024 10-K

185 paragraphs added · 167 removed · 144 edited across 4 sections

Item 1. Business

Business — how the company describes what it does

84 edited+14 added−7 removed29 unchanged
Biggest changeINVENTORIES, RETURNS, AND ALLOWANCES We believe it is important to maintain moderate inventory levels of certain of our finished goods in order to fulfill purchase orders in a timely manner. Historically, sufficient inventory levels, returns, and allowances have not been a significant factor in our business. BACKLOG We do not currently have any significant backlog of orders.
Biggest changeWe have three major raw material vendors that together accounted for approximately 83% of our raw material purchases in 2024 and 76% in 2023. Inventories, Returns, and Allowances We believe it is important to maintain moderate inventory levels of some of our finished goods in order to fulfill purchase orders in a timely manner.
MEDICAL LUBRICANTS Our medical lubricants are sold directly to manufacturers and marketers of finished medical products or to the contract manufacturers utilized by those companies. Sales of our medical lubricants are shipped EXW from our facility in Hauppauge, New York.
Medical Lubricants – Products Our medical lubricants are sold directly to manufacturers and marketers of finished medical products or to the contract manufacturers utilized by those companies. Sales of our medical lubricants are shipped EXW from our facility in Hauppauge, New York.
WATER We comply in all material respects with all laws and regulations on water discharge. ECOVADIS We joined EcoVadis as part of our commitment to Corporate Social Responsibility (“CSR”). EcoVadis is a global leader in guiding, measuring, and improving corporate environmental and social responsibility and sustainability performance.
Water Discharge We comply in all material respects with all laws and regulations on water discharge. ECOVADIS We joined EcoVadis as part of our commitment to Corporate Social Responsibility (“CSR”). EcoVadis is a global leader in guiding, measuring, and improving corporate environmental and social responsibility and sustainability performance.
In addition to the Lubrajel line of products, we also manufacture the following additional cosmetic ingredients, which accounted for less than 10% of total sales in 2023: B-122 ™ is a powdered lubricant used in the manufacture of certain cosmetics, such as pressed powders, eyeliners, and rouges, as well as some industrial products.
In addition to the Lubrajel line of products, we also manufacture the following additional cosmetic ingredients, which accounted for less than 10% of total sales in 2024 and 2023: ● B-122 ™ is a powdered lubricant used in the manufacture of certain cosmetics, such as pressed powders, eyeliners, and rouges, as well as some industrial products.
COMPETITION We primarily compete in the specialty ingredients/products space. The participants in this space offer a broad range of product lines designed to meet specific customer needs. Competition is largely based on product performance, price, quality, service, product availability, security of supply, and responsiveness of product development in cooperation with customers.
Competition We primarily compete in the specialty ingredients space. The participants in this space offer a broad range of product lines designed to meet specific customer needs. Competition is largely based on product performance, price, quality, service, product availability, security of supply, and responsiveness of product development in cooperation with customers.
Environmental: ● Company-specific emergency preparedness and response procedure regarding customer health and safety ● Measures to detect and/or eliminate accidental water contamination ● Formalized procedure related to materials/chemicals management ● Provision of Safety Data Sheets ● Employee awareness/training program on transportation of hazardous materials ● Measures to avoid emissions of dust or particles 2.
Environmental: ● Company-specific emergency preparedness and response procedure regarding customer health and safety ● Measures to detect and/or eliminate accidental water contamination ● Formalized procedure related to materials/chemicals management ● Provision of Safety Data Sheets ● Employee awareness/training program on transportation of hazardous materials ● Measures to avoid emissions of dust or particles 14 2.
In the last few years, to meet the growing consumer demand for “green” and sustainable products, we have focused on developing and launching new products which only contain ingredients that are considered “natural.” The Lubrajel products in the new natural line have been certified by the Cosmetic Organic and Natural Standard (“COSMOS”).
In the last few years, to meet the growing consumer demand for “green” and sustainable products, we have focused on developing and launching new products which only contain ingredients that are considered “natural.” The Lubrajel products in the natural line have been certified to meet the Cosmetic Organic and Natural Standard (“COSMOS”).
This standard is recognized globally by the cosmetic industry. The new natural line of products includes Lubrajel Natural, Lubrajel Marine, Lubrajel Oil Natural and Lubrajel Terra. All of the natural products are designed using green technology and contain natural raw materials. These products are multifunctional, Roundtable on Sustainable Palm Oil (“RSPO”) certified, Vegan, biodegradable and COSMOS approved.
This standard is recognized globally by the cosmetic industry. The COSMOS line of products includes Lubrajel Natural, Lubrajel Marine, Lubrajel Oil Natural and Lubrajel Terra. All of the natural products are designed using green technology and contain natural raw materials. These products are multifunctional, Roundtable on Sustainable Palm Oil (“RSPO”) certified, Vegan, biodegradable and COSMOS approved.
If necessary, we would also be able to sell directly to the end users of our products until such time as a new distributor is put in place. Our pharmaceutical products are sold to, and distributed by, full-line drug wholesalers throughout the United States.
If necessary, we would also be able to sell directly to the end users of our products until such time as a new distributor is put in place. 12 Our pharmaceutical products are sold to, and distributed by, full-line drug wholesalers throughout the United States.
The product development activities are focused on developing products for identified customers and market needs. We frequently collaborate with customers to develop the desired product to meet their specific needs. The R&D team also provides technical support services to assist our customers with application development and co-development.
The product development activities are focused on developing products for identified customers and unmet market needs. We frequently collaborate with customers to develop the desired product to meet their specific needs. The R&D team also provides technical support services to assist our customers with application development and co-development.
Our medical lubricants include Lubrajel MG, Lubrajel MGL, Lubrajel RRCG, Lubrajel RR, Lubrajel RC, Lubrajel RA, Lubrajel Fluid, Lubrajel LC, Lubrajel BA, and Lubrajel FACO. Lubrajel MG and Lubrajel MGL are our standard medical lubricants and can be applied to catheters, thermometers and other instruments to ensure ease of use and patient comfort.
Our medical lubricants include Lubrajel MG, Lubrajel MGL, Lubrajel RRCG, Lubrajel RR, Lubrajel RC, Lubrajel RA, Lubrajel Fluid, Lubrajel LC, Lubrajel BA, and Lubrajel FACO. 8 Lubrajel MG and Lubrajel MGL are our standard medical lubricants and can be applied to catheters, thermometers and other instruments to ensure ease of use and patient comfort.
ISO 9001:2015 CERTIFICATION On July 23, 2018, we were certified by DQS Inc. to be in compliance with the latest ISO standard, ISO 9001:2015, indicating that our documented procedures and overall operations had attained the high level of quality needed to comply with this current ISO certification level. Our current ISO 9001:2015 certification is valid through July 22, 2024.
ISO 9001:2015 Certification On July 23, 2018, we were certified by DQS Inc. to be in compliance with the latest ISO standard, ISO 9001:2015, indicating that our documented procedures and overall operations had attained the high level of quality needed to comply with this current ISO certification level. Our current ISO 9001:2015 certification is valid through July 22, 2027.
We use our product development and formulation expertise to maintain our market position and to propel future growth. We also focus on the development of new products that fill unmet market needs and have unique properties. Our products are sold into stable and growing markets such as personal care, medical devices and pharmaceuticals.
We use our product development and formulation expertise to maintain our market position and to propel future growth. We also focus on the development of new products that fill unmet market needs and have unique properties. Our products are sold into stable and growing markets such as personal care, medical devices and healthcare.
The cosmetic ingredients are not sold on a consignment basis, so unless a product is determined to be defective, it is not returnable, except at the discretion of the Company. Our pharmaceutical products are sold primarily to several full-line drug wholesalers which in turn supply those products to pharmacies, physicians, and hospitals.
The cosmetic ingredients are not sold on a consignment basis, so unless a product is determined to be defective, it is not returnable, except at our discretion. Our pharmaceutical products are sold primarily to several full-line drug wholesalers which in turn supply those products to pharmacies, physicians, and hospitals.
They are returnable only under specific circumstances in accordance with pharmaceutical industry standards, such as if the products are (a) damaged when received; (b) defective; (c) too close to their expiration dates to sell; or (d) within a year after their expiration dates. We operate in one business segment.
They are returnable only under specific circumstances in accordance with pharmaceutical industry standards, such as if the products are (a) damaged when received; (b) defective; (c) too close to their expiration dates to sell; or (d) within a year after their expiration dates. We operate as a single business segment.
COSMETIC INGREDIENTS : In the United States, our cosmetic ingredient products have been marketed and distributed exclusively by ASI in accordance with a marketing agreement entered into in 1996 with its predecessor company, International Specialty Products (“ISP”) and last automatically renewed on January 1, 2022.
Cosmetic Ingredients – Domestic Sales In the United States, our cosmetic ingredient products have been marketed and distributed exclusively by ASI in accordance with a marketing agreement entered into in 1996 with its predecessor company, International Specialty Products (“ISP”) and last automatically renewed on January 1, 2022.
We market our pharmaceutical products primarily through our dedicated Renacidin website. The pharmaceutical products are sold to hospitals and pharmacies primarily through full-line drug wholesalers, which purchase our products outright for resale to their customers. We also sell a small quantity of pharmaceutical products directly to hospitals and pharmacies.
We market our pharmaceutical products primarily through our dedicated Renacidin website. The pharmaceutical products are sold through full-line drug wholesalers, which purchase our products outright for resale to primarily, hospitals and pharmacies. We also sell a small quantity of pharmaceutical products directly to hospitals and pharmacies.
Prior to July 1, 2023, the Company manufactured and reported sales of a line of specialty industrial products; however, this product line was discontinued after the second quarter of 2023 due to low sales volume with no growth prospects.
Prior to July 1, 2023, we manufactured and reported sales of a line of specialty industrial products; however, this product line was discontinued after the second quarter of 2023 due to low sales volume with no growth prospects.
The current agreement with ASI terminated on December 31, 2023, pursuant of a letter provided by the Company to ASI on October 10, 2023. The purpose of the termination was to renegotiate the terms and conditions of the distribution agreement between the two companies.
The current agreement with ASI terminated on December 31, 2023, pursuant to a letter provided by us to ASI on October 10, 2023. The purpose of the termination was to renegotiate the terms and conditions of the distribution agreement between the two companies.
Globus, the Company's Chairman and Director of Research until his death on April 9, 2009. On February 10, 1982, a merger took place between UIR and Guardian Chemical Corporation ("Guardian"), an affiliate of UIR, whereby Guardian was merged into UIR and the name was changed to United-Guardian, Inc., a New York corporation.
Globus, our Chairman and Director of Research until his death on April 9, 2009. On February 10, 1982, a merger took place between UIR and Guardian Chemical Corporation (“Guardian”), an affiliate of UIR, whereby Guardian was merged into UIR and the name was changed to United-Guardian, Inc., a New York corporation.
That agreement was for the marketing of the Company’s cosmetic ingredients in North America, Central America, South America, Asia Pacific, and EMEA. ASI also has the exclusive right to market four of the Company’s products globally: Lubrajel Marine, Lubrajel BA, Lubrajel Oil PF and Lubrajel II XD PF.
That agreement was for the marketing of the Company’s cosmetic ingredients in North America, Central America, South America, Asia Pacific, and EMEA. ASI also had the exclusive right to market four of our products globally: Lubrajel Marine, Lubrajel BA, Lubrajel Oil PF and Lubrajel II XD PF.
It is compatible with traditional condom release powders which are used during the manufacture of latex condoms. Lubrajel LC, Lubrajel BA and Lubrajel FACO are hydrogel formulations developed for use in oral care applications. Sales of medical lubricants represented approximately 16% and 19% of our total sales for the years ended December 31, 2023 and 2022, respectively.
It is compatible with traditional condom release powders which are used during the manufacture of latex condoms. Lubrajel LC, Lubrajel BA and Lubrajel FACO are hydrogel formulations developed for use in oral care applications. Sales of medical lubricants represented approximately 17% and 16% of our total sales for the years ended December 31, 2024 and 2023, respectively.
Domestic sales of medical lubricants accounted for approximately 3% of our total sales in both 2023 and 2022. Although all shipments of medical lubricants to U.S. locations are considered domestic sales, a percentage of those shipments are subsequently shipped by some customers to foreign manufacturing facilities, which then produce finished products that could be marketed globally.
Domestic sales of medical lubricants accounted for approximately 4% of our total sales in 2024 and 3% of total sales in 2023. Although all shipments of medical lubricants to U.S. locations are considered domestic sales, a percentage of those shipments are subsequently shipped by some customers to foreign manufacturing facilities, which then produce finished products that could be marketed globally.
ASI. is the exclusive distributor of our products in the United States, Canada, Asia, South & Central America, Mexico, Europe (all regions other than France, the United Kingdom, Italy & Switzerland), Scandinavia, Africa, Australia, the Middle East and Korea.
ASI is the exclusive distributor of these products in the United States, Canada, Asia, South & Central America, Mexico, Europe (all regions other than France, the United Kingdom, Italy & Switzerland), Scandinavia, Africa, Australia, and the Middle East.
Prior to July 1, 2023, the Company manufactured and reported sales of a line of specialty industrial products; however, this product line was discontinued after the second quarter of 2023 due to low sales volume with no growth prospects.
Prior to July 1, 2023, we manufactured and reported sales of a line of specialty industrial products; however, this product line was discontinued after the second quarter of 2023 due to low sales volume and no growth prospects.
Sales are deemed final upon shipment, and we have no obligation to repurchase or allow the return of these goods unless they are defective. 8 UNITED-GUARDIAN, INC. PRODUCTS – MEDICAL LUBRICANTS Our medical lubricants are also sold under the Lubrajel brand since they are hydrogel formulations designed to provide sensory enhancement and lubrication to medical products.
Sales are deemed final upon shipment, and we have no obligation to repurchase or allow the return of these goods unless they are defective. Our medical lubricants are also sold under the Lubrajel brand since they are hydrogel formulations designed to provide sensory enhancement and lubrication to medical products.
FOREIGN SALES For the years ended December 31, 2023 and 2022, approximately 21% and 25%, respectively, of our sales revenue was from foreign sources, and was derived from (a) sales of our cosmetic ingredients to foreign distributors, which accounted for approximately 7% and 9% of sales, for the years ended December 31, 2023 and 2022, respectively, and (b) sales of medical lubricants directly to certain customers in foreign countries, which accounted for approximately 14% and 16% of our sales revenue for the years ended December 31, 2023 and 2022, respectively.
Foreign Sales For the years ended December 31, 2024 and 2023, approximately 16% and 21%, respectively, of our sales revenue was from foreign sources, and was derived from (a) sales of our cosmetic ingredients to foreign distributors, which accounted for approximately 7% of sales for each of the years ended December 31, 2024 and 2023, respectively, and (b) sales of medical lubricants directly to certain customers in foreign countries, which accounted for approximately 9% and 14% of our sales revenue for the years ended December 31, 2024 and 2023, respectively.
Our current products are separated into four distinct product categories: cosmetic ingredients, pharmaceuticals, medical lubricants and sexual wellness. Each product category is marketed differently. Effective July 1, 2023, the Company discontinued its industrial product line of products. Beginning in 2024, the Company added sexual wellness ingredients to its portfolio of product categories.
Our current products are separated into four distinct product categories: cosmetic ingredients, pharmaceuticals, medical lubricants and sexual wellness. Each product category is marketed differently. Effective July 1, 2023, we discontinued our industrial product line of products and beginning in 2024, we added sexual wellness ingredients to our portfolio of product categories.
We are committed to using green chemistry principles to produce biodegradable, natural, and safe products with renewable feedstocks. 13 UNITED-GUARDIAN, INC. SOLID WASTE We do not produce hazardous waste. We comply with U.S. Environmental Protection Agency (“EPA”) and Department of Transportation’s (“DOT”) regulations for the disposal of the solid waste.
We are committed to using green chemistry principles to produce biodegradable, natural, and safe products with renewable feedstocks. Solid Waste We do not produce hazardous waste. We comply with U.S. Environmental Protection Agency (“EPA”) and Department of Transportation’s (“DOT”) regulations for the disposal of the solid waste.
To address customer demand for preservative-free products, we developed and launched Lubrajel DV PF, Lubrajel IIXD PF, Lubrajel MS PF, Lubrajel Oil PF and Lubrajel PF. To address customer demand for paraben-free products, we developed and launched Lubrajel DV free, Lubrajel IIXD free, Lubrajel MS free, Lubrajel NP Free and Lubrajel Oil free.
To address customer demand for paraben-free products, we developed and launched Lubrajel DV free, Lubrajel IIXD free, Lubrajel MS free, Lubrajel NP Free and Lubrajel Oil free.
HUMAN CAPITAL MANAGEMENT We currently have 25 employees, 3 of whom serve in an executive capacity, 18 in research, quality control and manufacturing, 2 in maintenance and construction, and 2 in office and administrative support services. Of the total number of employees, 23 are employed full-time.
Employees Human Capital Management We currently have 25 employees, 3 of whom serve in an executive capacity, 18 in research, quality control and manufacturing, 1 in maintenance and construction, and 3 in office and administrative support services. Of the total number of employees, 24 are employed full-time.
In October 2023, the Company entered into a distribution agreement with Brenntag Specialties, a global market leader in chemicals and ingredients distribution, for the distribution of the Company’s new Natrajel™ line of sexual wellness ingredients in the United States, Canada, Mexico, Central America and South America.
In October 2023, we entered into a distribution agreement with Brenntag Specialties, a global market leader in chemicals and ingredients distribution, for the distribution of our new Natrajel ® line of sexual wellness ingredients in the United States, Canada, Mexico, Central America and South America.
In October 2023, the Company entered into a distribution agreement with Brenntag Specialties, a global market leader in chemicals and ingredients distribution, for distribution of the Company’s new Natrajel line of sexual wellness ingredients in the United States, Canada, Mexico, Central America and South America.
In October 2023, we entered into a distribution agreement with Brenntag Specialties, a global market leader in chemicals and ingredients distribution, for distribution of our new Natrajel line of sexual wellness ingredients in the United States, Canada, Mexico, Central America and South America.
Although we have experienced significant pricing pressure from low-cost competitors, we believe that we can compete with these low-cost competitors because our customers value our innovation capabilities, the quality of our products, the reliability of supply and the outstanding technical support.
Although we have experienced significant pricing pressure from low-cost competitors, we believe that we can compete effectively with these low-cost competitors because our customers value our innovation capabilities, the quality of our products, the reliability of supply and our technical expertise.
Item 1. Business OVERVIEW United-Guardian, Inc. (“Registrant” or “Company”) is a Delaware corporation that, through its Guardian Laboratories division, manufactures and markets cosmetic ingredients, pharmaceutical products, medical lubricants and sexual wellness ingredients.
Item 1. Business Overview United-Guardian, Inc. (“Company”) is a Delaware corporation that, through its Guardian Laboratories division, manufactures, markets and develops specialty cosmetic ingredients, pharmaceutical products, medical lubricants and sexual wellness ingredients.
One of the Company’s most important product lines is its Lubrajel® line of multifunctional hydrogel formulations, which are designed to provide sensory enhancement, lubrication, hydration, and texture to both personal care and medical products.
One of our most important product lines is our Lubrajel ® line of multifunctional hydrogel formulations, which are designed to provide sensory enhancement, lubrication, hydration, and texture to both personal care and medical products.
We expect our research and development expenses in 2024 to be higher than those in 2023 in order to support innovation and growth initiatives. Any additional increase in R&D expenses will also depend on whether capital investments are required in order to continue development work on, or to manufacture, any of the new products under development. 12 UNITED-GUARDIAN, INC.
We expect our research and development expenses in 2025 to be higher than those in 2024 in order to support innovation and growth initiatives. Any additional increase in R&D expenses will also depend on whether capital investments are required in order to continue development work on, or to manufacture, any of the new products under development.
These documents are also available in print to any stockholder who requests them. Information contained on our website is not part of this Annual Report on Form 10-K and is not incorporated by reference in this document.
Securities and Exchange Commission (“SEC”). These documents are also available in print to any stockholder who requests them. The information contained on our website is not part of this Annual Report on Form 10-K and is not incorporated by reference in this document.
The cosmetic ingredients manufactured by the Company are marketed to end users through our worldwide network of distributors and are currently used by many of the major manufacturers of cosmetic products.
The cosmetic ingredients we manufacture are marketed to end users through our worldwide network of distributors and are currently used by many of the major manufacturers of cosmetic products.
Based on sales information provided by ASI, 69% of ASI’s sales of our products in 2023 were to customers in foreign countries, compared with 65% in 2022. ASI’s largest foreign market in both 2023 and 2022 was China, which accounted for approximately 29% of ASI’s sales of our products in 2023 and 38% in 2022.
Based on sales information provided by ASI, 79% of ASI’s sales of our products in 2024 were to customers in foreign countries, compared with 69% in 2023. ASI’s largest foreign market in both 2024 and 2023 was China, which accounted for approximately 43% of ASI’s sales of our products in 2024 and 29% in 2023.
All the products that the Company markets, except for Renacidin®, are produced at its facility in Hauppauge, New York. Renacidin, a urological product, is manufactured for the Company by an outside contract manufacturer. Our predecessor entity, United International Research, Inc. ("UIR"), was founded and incorporated in New York in 1942 by Dr. Alfred R.
All the products that we market, except for Renacidin®, are produced at our facility in Hauppauge, New York. Renacidin, a urological product, is manufactured for us by an outside contract manufacturer. Our predecessor entity, United International Research, Inc. (“UIR”), was founded and incorporated in New York in 1942 by Dr. Alfred R.
The Company develops new products using natural and environmentally friendly raw materials, which is a priority to many of the Company’s cosmetic customers. The Company’s research and development department also modifies, refines, and expands the uses for existing products, with the goal of further developing the markets that its products are used in.
We develop new products using natural and environmentally friendly raw materials, which is a priority for many of our cosmetic customers. Our research and development department also modifies, refines, and expands the uses for existing products, with the goal of further developing the markets that our products are used in.
This standard is recognized globally by the cosmetic industry. We ship our cosmetic ingredients to our distributors Ex Works (“EXW”) from our facility in Hauppauge, New York. Those distributors in turn resell those products to their customers, who are typically the manufacturers and marketers of cosmetic and personal care products.
We ship our cosmetic ingredients to our distributors Ex Works (“EXW”) from our facility in Hauppauge, New York. Those distributors in turn resell those products to their customers, who are typically the manufacturers and marketers of cosmetic and personal care products.
Department of Veterans Affairs, and other government agencies. We also sell a small quantity of pharmaceutical products directly to hospitals and pharmacies. We arrange for, and cover the cost of, shipping our pharmaceutical products, and sales of those products are final when shipped.
We also sell a small quantity of pharmaceutical products directly to hospitals and pharmacies. We arrange for, and cover the cost of, shipping our pharmaceutical products, and sales of those products are final when shipped.
Ethics: ● Disciplinary sanctions to deal with policy violations ● Policy on information security ● Polices on corruption ● Whistleblower procedure to report ethics issues 14 UNITED-GUARDIAN, INC. 4.
Ethics: ● Disciplinary sanctions to deal with policy violations ● Policy on information security ● Polices on corruption ● Whistleblower procedure to report ethics issues 4.
In addition, the R&D team provides ongoing technical assistance and knowhow to quality assurance and manufacturing personnel to ensure consistent standards for our products and to deliver environmentally responsible products that exceed customer expectations. Our research and development expenses in 2023 were $463,992 compared with $490,770 in 2022.
In addition, the R&D team provides ongoing technical assistance and know-how to quality assurance and manufacturing personnel to ensure consistent standards for our products and to deliver environmentally responsible products that exceed customer expectations. Our research and development expenses in 2024 were $456,779 compared with $463,992 in 2023.
Information contained on either website is not part of this Annual Report on Form 10-K and is not incorporated by reference in this document. 6 UNITED-GUARDIAN, INC.
The information contained on either website is not part of this Annual Report on Form 10-K and is not incorporated by reference in this document.
In the last few years, to meet the growing demand for “green” and sustainable products, the Company has focused on developing and launching new products which only contain ingredients that are considered “natural.” The Company’s Lubrajel products in the new natural line have been certified by the Cosmetic Organic and Natural Standard (“COSMOS”).
In the last few years, to meet the growing demand for “green” and sustainable products, we have focused on developing and launching new products which only contain ingredients that are considered “natural.” Our Lubrajel products in the natural line have been certified to meet the Cosmetic Organic and Natural Standard (“COSMOS”). This standard is recognized globally by the cosmetic industry.
Although there were no sales of these products during 2023, the Company anticipates that it will begin manufacturing and reporting sales of this new line of products in 2024. We also conduct research and development, primarily related to the development of new and unique cosmetic ingredients and medical lubricants.
Although there were no sales of these products during 2024, we anticipate that we will begin manufacturing and reporting sales of this new line of products in 2025. 5 We also conduct research and development, primarily related to the development of new and unique cosmetic ingredients, sexual wellness ingredients and medical lubricants.
The SEC maintains a website at www.sec.gov that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC. DESCRIPTION OF THE BUSINESS The Company manufactures and markets cosmetic ingredients, pharmaceuticals, medical lubricants and sexual wellness ingredients.
The SEC maintains a website at www.sec.gov that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC. Business Description We manufacture, market and develop specialty cosmetic ingredients, pharmaceuticals, medical lubricants and sexual wellness ingredients.
At this time the Company and ASI have not finalized a new agreement, but we believe that a new agreement will be executed by the end of the second quarter of 2024, although there can be no assurance that a new agreement will be executed.
At this time we have not finalized a new agreement, but we are hopeful that a new agreement will be executed by the end of the second quarter of 2025, although there can be no assurance that a new agreement will be executed.
COMPETITIVE PAY AND BENEFITS We are committed to paying our employees in a fair and equitable manner, regardless of race, gender or country of origin. We believe employees should be compensated equitably based on performance, skills, and experience. We offer a competitive benefits program to support employees through all life stages.
Compensation and Benefits We are committed to paying our employees in a fair and equitable manner, regardless of race, gender or country of origin. We believe employees should be compensated equitably based on performance, skills, and experience.
INCLUSION AND DIVERSITY We focus significant resources on developing and retaining diverse talent and are committed to actively creating a collaborative environment of innovation that leverages the talents of a diverse workforce to drive sustainable growth and create value for our stockholders, customers, employees, and the community in which we operate.
We offer a competitive benefits program to support employees through all life stages. 15 Employee Engagement We focus significant resources on developing and retaining diverse talent and are committed to actively creating a collaborative environment of innovation that leverages the talents of our workforce to drive sustainable growth and create value for our stockholders, customers, employees, and the community in which we operate.
Our current product offerings are segregated into the following categories: ● Cosmetic Ingredients : Cosmetic ingredients include an extensive line of multifunctional hydrogel formulations designed to offer sensory enhancement, lubrication, texture and moisturization to personal care products. ● Medical Lubricants : Medical lubricants include a line of hydrogel formulations designed to offer sensory enhancement and lubrication to medical products. ● Pharmaceutical Products : Pharmaceutical products include an FDA approved prescription drug that is used primarily to prevent and to dissolve calcifications in urethral catheters, as well as a chlorine-based topical antimicrobial. 5 UNITED-GUARDIAN, INC. ● Sexual Wellness Ingredients : Sexual wellness ingredients include a line of hydrogel formulations designed to offer sensory enhancement, lubrication and moisturization to sexual wellness applications.
All references in this Annual Report to “sales” or “Sales” shall mean “net sales” unless specifically identified as “gross sales.” 6 Products Our current product offerings are segregated into the following categories: ● Cosmetic Ingredients : Cosmetic ingredients include an extensive line of multifunctional hydrogel formulations designed to offer sensory enhancement, lubrication, texture and moisturization to personal care products. ● Medical Lubricants : Medical lubricants include a line of hydrogel formulations designed to offer sensory enhancement and lubrication to medical products. ● Pharmaceutical Products : Pharmaceutical products include an FDA approved prescription drug that is used primarily to prevent and to dissolve calcifications in urethral catheters, as well as a chlorine-based topical antimicrobial. ● Sexual Wellness Ingredients : Sexual wellness ingredients include a line of hydrogel formulations designed to offer sensory enhancement, lubrication and moisturization to sexual wellness applications.
Many key competitors are significantly larger than us and have greater financial resources, leading to greater operating and financial flexibility. To improve our competitive position, we are strengthening our core capabilities and investing in product development, especially in naturally-derived products. We will also continue providing high-quality products, excellent technical service and we will continue to be a reliable supplier.
Many key competitors are significantly larger than us and have greater financial resources, leading to greater operating and financial flexibility. To improve our competitive position, we are strengthening our core capabilities and investing in product development, especially in naturally derived products.
Sustainable Procurement: ● RSPO Supply Chain Certification ● Formal assessment of supplier’s progress with regards to REACH requirements ● No use of tin, tantalum, tungsten, gold, and/or their derivatives Areas that required continual improvements were reviewed, and programs and policies were implemented as follows: 1) Environmental impact from product end of life: we joined a prescription take-back program for our pharmaceutical products in the state of California. 2) Measures on energy consumption and GHG’s: we created a carbon footprint procedure that we continue to update and plan to roll out in 2024.
Sustainable Procurement: ● RSPO Supply Chain Certification ● Formal assessment of supplier’s progress with regards to REACH requirements ● No use of tin, tantalum, tungsten, gold, and/or their derivatives Areas that required continual improvements were reviewed, and programs and policies were implemented as follows: 1) Environmental impact from product end of life: we joined a prescription take-back program for our pharmaceutical products in the state of California. 2) Measures on energy consumption and GHG’s: we created a sustainability committee that meets monthly to review our Scope 1 and Scope 2 emissions as well as determine ways to reduce our energy consumption. 3) Established formal CSR Policy: we created a CSR policy to establish a framework for our commitment to sustainable performance.
Although there were no sales of these products during 2023, the Company anticipates that it will begin manufacturing and reporting sales of this new line of products in 2024. The Company conducts various research and development activities. The Company’s research and development department primarily develops new and unique cosmetic ingredients.
Although there were no sales of these products during 2024, we anticipate that we will begin manufacturing and reporting sales of this new line of products in 2025. We conduct various research and development activities. Our research and development department primarily develops new and unique specialty cosmetic and sexual wellness ingredients.
Sales of our cosmetic ingredients represented approximately 38% and 41% of our total sales for the years ended December 31, 2023 and 2022, respectively. We believe that there is potential to continue growing the sales of our cosmetic ingredients through new product development, development of new product applications, development of additional claim substantiations, and geographic expansion.
We believe that there is potential to continue growing the sales of our cosmetic ingredients through the development of new products, product applications, additional claim substantiations, and geographic expansion.
Our cosmetic ingredients are currently sold globally by five distributors, of which Ashland Specialty Ingredients (“ASI”), a business segment of Ashland, Inc., is the largest.
The cosmetic ingredients we manufacture are marketed and sold to end users through our worldwide network of distributors and marketing partners. Our cosmetic ingredients are currently sold globally by five distributors, of which Ashland Specialty Ingredients (“ASI”), a business segment of Ashland, Inc., is the largest.
Because of its alcohol solubility it may also be used in fragrance products, such as perfumes and toiletries. Its emolliency makes it an excellent additive to shampoos, bath products and facial cleansers.
Because of its alcohol solubility it may also be used in fragrance products, such as perfumes and toiletries.
Our website, www.u-g.com, which is made available free of charge, contains our annual reports on Form 10-K, quarterly reports on Form 10-Q, and any amendments to those reports. All such reports are available as soon as reasonably practicable after they are electronically filed with, or electronically furnished to, the U.S. Securities and Exchange Commission (“SEC”).
Our current product offerings include cosmetic ingredients, medical lubricants, pharmaceuticals and sexual wellness ingredients. Our website, www.u-g.com, contains our annual reports on Form 10-K, quarterly reports on Form 10-Q, and any amendments to those reports. All such reports are available as soon as reasonably practicable after they are electronically filed with, or electronically furnished to, the U.S.
PRODUCTS - PHARMACEUTICALS RENACIDIN is a prescription drug approved by the FDA that is used primarily to prevent and to dissolve calcifications in urethral catheters. We maintain a specific website dedicated to this product at www.renacidin.com. CLORPACTIN ® WCS- 90 (“Clorpactin”) is a chlorine-based drug that is marketed as a topical antimicrobial and is also used in urology.
We maintain a specific website dedicated to this product at www.renacidin.com. ● CLORPACTIN ® WCS- 90 (“Clorpactin”) is a chlorine-based drug that is marketed as a topical antimicrobial and is also used in urology. It is also a powerful disinfectant, fungicide, and deodorizer.
DOMESTIC SALES For the years ended December 31, 2023 and 2022, approximately 79% and 75%, respectively, of our sales were from domestic sources, which represents sales within the United States only.
All the products are RSPO certified, vegan, biodegradable and COSMOS approved . 9 Domestic Sales For the years ended December 31, 2024 and 2023, approximately 84% and 79%, respectively, of our sales were from domestic sources, which represents sales within the United States only.
Our other cosmetic ingredient distributors are Azelis UK Ltd in the United Kingdom, Sederma SAS, a subsidiary of Croda International Plc., in France, Safic-Alcan S.p.A. in Italy, and Azelis Cosmetics GmbH in Switzerland. The Company is currently in the process of renegotiating some of its distribution agreements.
Our other cosmetic ingredient distributors are Sederma SAS (a subsidiary of Croda International Plc.) in France, Safic-Alcan S.p.A. in Italy, and Azelis Cosmetics GmbH in Switzerland. We are currently in the process of renegotiating some of our marketing and distribution agreements. We ship our cosmetic ingredients to our distributors Ex Works (“EXW”) from our facility in Hauppauge, New York.
Our plan is to review our current program to ensure it covers all pertinent environmental monitoring and establish goals in 2024. We have also joined initiatives for core raw materials, such as the Roundtable on Sustainable Palm Oil (“RSPO”), to ensure that we support suppliers in protecting the environment and the people in it.
We have established goals to lower our energy emissions and recycle water used in our manufacturing process. We have also joined initiatives for core raw materials, such as the Roundtable on Sustainable Palm Oil (“RSPO”), to ensure that we support suppliers in protecting the environment and the people in it.
Portions of our operating expenses are directly attributable to complying with federal, state, and local environmental statutes and regulations. In 2023 and 2022, we incurred approximately $41,000 and $39,000, respectively, in federal, state, and local environmental law compliance expenses. There was no material financial or other impact on our results of operations as a result of compliance with environmental laws.
Portions of our operating expenses are directly attributable to complying with federal, state, and local environmental statutes and regulations. In 2024 and 2023, we incurred approximately $24,000 and $41,000, respectively, in federal, state, and local environmental law compliance expenses.
Sales to our largest distributor, ASI, accounted for approximately 30% of total sales in 2023 and 32% of sales in 2022. 10 UNITED-GUARDIAN, INC. PHARMACEUTICALS : Our pharmaceutical products are marketed only in the United States and are sold primarily through full-line drug wholesalers.
Pharmaceuticals – Domestic Sales Our pharmaceutical products are marketed only in the United States and are sold primarily through full-line drug wholesalers. Sales of those products accounted for approximately 39% of sales in 2024, compared with approximately 45% in 2023.
The cosmetic ingredients are not sold on a consignment basis, so unless a product is determined to be defective, it is not returnable, except at our discretion.
The distributors resell the products to their customers, which are typically major manufacturers and marketers of cosmetic and personal care products who utilize our products in their finished products. The cosmetic ingredients are not sold on a consignment basis, so unless a product is determined to be defective, it is not returnable, except at our discretion.
SEASONALITY Due to the nature of our business and the types of products that we market, we are not subject to any significant seasonal fluctuations in sales. CUSTOMERS Our cosmetic ingredients are currently marketed and sold globally by five distributors. Those distributors, in turn, market and distribute those products to their customers.
Customers Our cosmetic ingredients are currently marketed and sold globally by five distributors. Those distributors, in turn, market and distribute those products to their customers.
LUBRASIL ™ II SB is a special formulation of Lubrajel in which silicone oil is incorporated into a Lubrajel base using proprietary technology that enables the product to maintain much of the clarity of regular Lubrajel. The product has a silky feel and is water resistant while at the same time providing moisturization.
Its emolliency makes it an excellent additive to shampoos, bath products and facial cleansers. ● LUBRASIL ™ II SB is a special formulation of Lubrajel in which silicone oil is incorporated into a Lubrajel base using proprietary technology that enables the product to maintain much of the clarity of regular Lubrajel.
PRODUCTS - COSMETIC INGREDIENTS: LUBRAJEL is an extensive line of multifunctional hydrogel formulations designed to mainly provide sensory enhancement, lubrication, and texture to personal care products. Some of the Lubrajel products also offer skin moisturization benefits. The Lubrajel products are primarily used in skin care products such as moisturizers, anti-aging creams, body lotions, face serums, spa products and sunscreens.
Cosmetic Ingredients – Products ● LUBRAJEL is an extensive line of multifunctional hydrogel formulations designed to mainly provide sensory enhancement, lubrication, and texture to personal care products. Most if not all of the Lubrajel products also offer skin hydration benefits.
These programs include the Veterans Affairs Federal Supply Schedule (“FSS”), and the Medicare Part D Coverage Gap Discount Program (“CGDP”). These programs require us to sell our product at a discounted price, typically given in the form of a rebate.
These programs require us to sell our product at a discounted price, typically given in the form of a rebate.
We are further committed and have implemented strict policies against anti-discrimination, anti-harassment and anti-bulling, and will not compromise employee health and safety or the environment for profit. ENVIRONMENTAL AND CORPORATE SOCIAL RESPONSIBILITY We have a proactive mindset for sustainability. We are committed to sustainable growth and minimizing our impact on the local community and the environment.
We are committed to protecting the safety, health and security of our employees and that of the environment in which we operate. We are further committed and have implemented strict policies against anti-discrimination, anti-harassment and anti-bulling, and will not compromise employee health and safety or the environment for profit.
INTELLECTUAL PROPERTY In recent years, we have elected to rely on trade secret protection to protect our intellectual property for proprietary product formulations and manufacturing methods. We will file for patent protection in situations where we believe that relying on trade secret protection alone would not provide sufficient protection.
We will continue to provide high-quality products, technical expertise and be a reliable supplier to our distributors and customers. 11 Intellectual Property In recent years, we have elected to rely on trade secret protection to protect our intellectual property for proprietary product formulations and manufacturing methods.
The Lubrajel products are also used in makeup products such as primers and foundations. Each Lubrajel product offers unique benefits for the formulation of skin care and color cosmetic products. The basic product line includes Lubrajel CG, Lubrajel DV, Lubrajel IIXD, Lubrajel MS, Lubrajel NP and Lubrajel Oil. 7 UNITED-GUARDIAN, INC.
The Lubrajel products are primarily used in skin care products such as moisturizers, anti-aging creams, body lotions, face serums and masks, spa products and sunscreens. The Lubrajel products are also used in makeup products such as primers and foundations. Each Lubrajel product offers unique benefits for the formulation of skin care and color cosmetic products.
EMPLOYEES HEALTH AND SAFETY We value all of our employees, suppliers, customers and distributors as well as the broader environment in which we all live and work. We are committed to protecting the safety, health and security of our employees and that of the environment in which we operate.
There was no material financial or other impact on our results of operations as a result of compliance with environmental laws. 13 Health and Safety We value all of our employees, suppliers, customers and distributors as well as the broader environment in which we all live and work.
We believe that there is potential to continue growing the sales of our medical lubricants through new product development, development of new product applications and markets, and geographic expansion. PHARMACEUTICALS We sell our pharmaceutical products primarily to full-line drug wholesalers, which in turn supply those products to pharmacies, physicians, hospitals, long-term care facilities, the U.S.
Our pharmaceutical products represented 39% and 45% of our total sales for the years ended December 31, 2024 and 2023, respectively. We sell our pharmaceutical products primarily to full-line drug wholesalers, which in turn supply those products to pharmacies, physicians, hospitals, long-term care facilities, the U.S. Department of Veterans Affairs, and other government agencies.
We are committed to measuring and monitoring our impact on the environment and, where appropriate, making improvements. We comply in all material respects with all federal, state and local environmental regulations. We have recently established a carbon footprint monitoring program.
Environmental and Corporate Social Responsibility Sustainability We have a proactive mindset for sustainability. We are committed to sustainable growth and minimizing our impact on the local community and the environment. We are committed to measuring and monitoring our impact on the environment and, where appropriate, making improvements.
Our sales, as reported, are net of these rebates, some of which are estimated and are recorded in the same period that the revenue is recognized. MEDICAL LUBRICANTS : We sell our medical lubricants directly to end users or to contract manufacturers utilized by the end users.
Our sales, as reported, are net of these rebates, some of which are estimated and are recorded in the same period that the revenue is recognized. 10 Sexual Wellness – Domestic Sales Sexual wellness ingredients include a line of hydrogel formulations designed to offer sensory enhancement, lubrication, and moisturization to sexual wellness applications.
Sales of those products accounted for approximately 45% of sales in 2023, compared with approximately 39% in 2022. During 2023 and 2022, we participated in various government drug rebate programs related to the sale of Renacidin, our most important pharmaceutical product.
During 2024 and 2023, we participated in various government drug rebate programs related to the sale of Renacidin, our most important pharmaceutical product. These programs include the Veterans Affairs Federal Supply Schedule (“FSS”), and the Medicare Part D Coverage Gap Discount Program (“CGDP”).

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeItem 2. Properties We own our principal office, manufacturing, and research and development facility consisting of a 50,000 square foot facility on a 2.7-acre parcel located at 230 Marcus Boulevard, Hauppauge, New York 11788.
Biggest changeItem 2. Properties We own our principal office, manufacturing, and research and development facility consisting of a 50,000 square foot facility on a 2.7-acre parcel located at 230 Marcus Boulevard, Hauppauge, New York 11788. Approximately 30,000 square feet of the facility is manufacturing space, 15,000 square feet is warehouse space, and 5,000 square feet is office and laboratory space.
The property is presently unencumbered and adequately insured.
We believe that the property is adequate for our immediately foreseeable needs. The property is presently unencumbered and we believe the property is adequately insured.
Removed
Of the 50,000 square feet, approximately 30,000 square feet is manufacturing space, 15,000 square feet is warehouse space, and 5,000 square feet is office and laboratory space. We have fully developed the 2.7 acres, and fully utilize the building occupying the land. We believe that the property is adequate for our immediately foreseeable needs.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeOn November 15, 2022, our Board of Directors declared a semi-annual cash dividend of $0.31 per share, which was paid on December 7, 2022 to all stockholders of record as of November 28, 2022. Item 6. [RESERVED]
Biggest changeOn January 27, 2025, our Board of Directors declared a cash dividend of $0.35 per share, which was paid on February 18, 2025, to all holders of record as of February 10, 2025.
On January 30, 2024, our Board of Directors declared a cash dividend of $.0.25 per share, which was paid on February 20, 2024 to all stockholders of record as of February 12, 2024.
On January 30, 2024, our Board of Directors declared a cash dividend of $0.25 per share, which was paid on February 20, 2024, to all holders of record as of February 12, 2024.
Cash Dividends On July 12, 2023, our Board of Directors declared a cash dividend of $0.10 per share, which was paid on August 2, 2023, to all stockholders of record as of July 26, 2023. The Company did not declare any other dividends in 2023.
On July 12, 2023, our Board of Directors declared a cash dividend of $0.10 per share, which was paid on August 2, 2023, to all stockholders of record as of July 26, 2023. We did not declare any other dividends in 2023.
Item 5. Market for Registrant ’ s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Market Information Our Common Stock is currently traded on the NASDAQ Global Market, under the symbol “UG” Holders of Record As of March 1, 2024, there were 355 holders of record of Common Stock.
Item 5. Market for Registrant ’ s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Market Information Our Common Stock is currently traded on the NASDAQ Global Market, under the symbol “UG” Holders of Record As of March 3, 2025, there were 342 holders of record of Common Stock.
In June of 2023, the Company’s Board of Directors changed the Company’s dividend declaration practice and expects to consider a semi-annual dividend declaration in January and July of each year.
In June of 2023, our Board of Directors changed the dividend declaration practice to a semi-annual dividend declaration in January and July of each year.
On May 10, 2022, our Board of Directors declared a semi-annual cash dividend of $0.37 per share, which was paid on June 1, 2022 to all stockholders of record as of May 23, 2022.
Dividend Policy On July 10, 2024, our Board of Directors declared a cash dividend of $0.35 per share, which was paid on July 31, 2024, to all holders of record as of July 23, 2024.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeRevenue Recognition We record revenue in accordance with ASC Topic 606 “Revenue from Contracts with Customers.” Under this guidance, revenue is recognized when a customer obtains control of promised goods or services, in an amount that reflects the consideration expected to be received in exchange for those goods or services. Our principal source of revenue is product sales.
Biggest changeDuring 2024 and 2023, we did not record an impairment charge regarding our investment in marketable securities because management believes, based on an evaluation of the circumstances, that any decline in fair value below the cost of certain of our marketable securities is temporary. 19 Revenue Recognition We record revenue in accordance with ASC Topic 606 “ Revenue from Contracts with Customers .” Under this guidance, revenue is recognized when a customer obtains control of promised goods or services, in an amount that reflects the consideration expected to be received in exchange for those goods or services.
We have no off-balance-sheet transactions that have, or are reasonably likely to have, a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources. New Accounting Pronouncements See Note “A” to the financial statements regarding new accounting pronouncements, which note is incorporated herein by reference.
We have no off-balance-sheet transactions that have, or are reasonably likely to have, a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources. 24 New Accounting Pronouncements See Note “A” to the financial statements regarding new accounting pronouncements, which note is incorporated herein by reference.
These deductions represent estimates of the related obligations and, as such, knowledge and judgment are required when estimating the impact of these revenue deductions on sales for a reporting period. During 2023 and 2022, we participated in various government drug rebate programs related to the sale of Renacidin, our most important pharmaceutical product.
These deductions represent estimates of the related obligations and, as such, knowledge and judgment are required when estimating the impact of these revenue deductions on sales for a reporting period. During 2024 and 2023, we participated in various government drug rebate programs related to the sale of Renacidin, our most important pharmaceutical product.
Our long-term liquidity position will be dependent upon our ability to generate sufficient cash flow from profitable operations, and we expect to continue to use our cash to make dividend payments, purchase marketable securities, and to take advantage of growth opportunities that may arise that are in the best interest of our Company and our stockholders.
Our long-term liquidity position will be dependent upon our ability to generate sufficient cash flow from profitable operations, and we expect to continue to use our cash to make dividend payments, purchase marketable securities, and to take advantage of growth opportunities that may arise that are in the best interest of the business and our stockholders.
Although we believe that we have been reasonably successful in identifying write-downs in a timely manner, sudden changes in buying patterns from customers, either due to a shift in product interest and/or a complete pull back from their expected order levels, may result in the recognition of larger-than-anticipated write-downs.
Although we believe that we have been reasonably successful in identifying write-downs in a timely manner, sudden changes in buying patterns from customers, either due to a shift in product interest and/or a complete pullback from their expected order levels, may result in the recognition of larger-than-anticipated write-downs.
Our cosmetic products are shipped “Ex-Works” from our facility in Hauppauge, NY, and the risk of loss and responsibility for the shipment passes to the customer upon shipment. Sales of our medical lubricant products are deemed final upon shipment, and we have no obligation to repurchase or allow the return of these goods unless they are defective.
Our cosmetic products are shipped EXW from our facility in Hauppauge, NY, and the risk of loss and responsibility for the shipment passes to the customer upon shipment. Sales of our medical lubricant products are deemed final upon shipment, and we have no obligation to repurchase or allow the return of these goods unless they are defective.
Company management, as well as the Investment Committee of the Board of Directors, continue to closely monitor the Company's investment portfolio and will make any adjustments they believe may be necessary or appropriate in order to minimize the future impact on the Company’s financial performance due to volatility of the global financial markets.
Management, as well as the Investment Committee of the Board of Directors, continue to closely monitor our investment portfolio and will make any adjustments they believe may be necessary or appropriate in order to minimize the future impact on our financial performance due to volatility of the global financial markets.
While our credit losses have historically been low and within expectations, we may not continue to experience the same credit loss rates that have historically been attained. The receivables are highly concentrated in a relatively small number of customers.
While our credit losses have historically been low and within expectations, we may not experience the same credit loss rates that have historically been attained in the future. The receivables are highly concentrated in a relatively small number of customers.
The following accounting policies are those that we consider critical to an understanding of the financial statements because their application places the most significant demands on management’s judgment. Our financial results might have been different if other assumptions had been used or other conditions had prevailed. 17 UNITED-GUARDIAN, INC.
The following accounting policies are those that we consider critical to an understanding of the financial statements because their application places the most significant demands on management’s judgment. Our financial results might have been different if other assumptions had been used or other conditions had prevailed.
When determining the reserve for credit losses, the Company takes into consideration current and future economic conditions and the impact that these changing dynamics may have on potential future losses. The timing between recognition of revenue for product sales and the receipt of payment is not significant.
When determining the reserve for credit losses, we take into consideration current and future economic conditions and the impact that these changing dynamics may have on potential future losses. The timing between recognition of revenue for product sales and the receipt of payment is not significant.
Our sales, as reported, are subject to a variety of deductions, some of which are estimated. These deductions are recorded in the same period in which the revenue is recognized.
Our principal source of revenue is product sales. Our sales, as reported, are subject to a variety of deductions, some of which are estimated. These deductions are recorded in the same period in which the revenue is recognized.
The Company performs ongoing credit evaluations of our customers and adjusts credit limits, as determined by a review of current credit information. We continuously monitor collection and payments from customers and maintain an allowance for credit losses based upon historical experience, anticipation of uncollectible accounts receivable and any specific customer collection issues that have been identified.
We perform ongoing credit evaluations of our customers and adjust credit limits, as determined by a review of current credit information. We continuously monitor collection and payments from customers and maintain an allowance for credit losses based upon historical experience, anticipation of uncollectible accounts receivable and any specific customer collection issues that have been identified.
Our standard credit terms, which vary depending on the customer, range between 30 and 60 days. The Company provides an allowance for credit losses related to its accounts receivable for which collection is doubtful in accordance with ASU 2016-13.
Our standard credit terms, which vary depending on the customer, range between 30 and 60 days. We provide an allowance for credit losses related to our accounts receivable for which collection is doubtful in accordance with ASU 2016-13.
The receivables turnover, or “Days Sales Outstanding,” for 2023, was 50 days, compared with 47 days in 2022. The allowance for credit losses on accounts receivable decreased from $20,063 in 2022 to $16,672 in 2023, and we believe that the net balance of our accounts receivable as of December 31, 2022 was, and continues to be, fully collectible.
The receivables turnover, or “Days Sales Outstanding,” for 2024, was 45 days, compared with 50 days in 2023. The allowance for credit losses on accounts receivable decreased from $16,672 in 2023 to $14,342 in 2024, and we believe that the net balance of our accounts receivable as of December 31, 2024 was, and continues to be, fully collectible.
We expect that this competitive environment will continue in 2024 and we plan to enhance our competitive position by strengthening our core capabilities and investing in new products, especially in the area of naturally-derived products. We will also continue providing high-quality products, excellent technical support, and the reliability our customers have come to expect from us.
We expect that this competitive environment will continue in 2025 and we plan to enhance our competitive position by strengthening our core capabilities and investing in new products, especially in the area of naturally derived products. We will continue to provid high-quality products, technical expertise, and the reliability our customers have come to expect from us.
The overall financial impact of this new program will vary depending on the products being reimbursed, but does have the potential to increase Medicare Part D rebates for drug manufacturers.
The overall financial impact of this new program will vary depending on the products being reimbursed but it is expected to increase Medicare Part D rebates for drug manufacturers.
We have performed an evaluation of our inventory on hand as of December 31, 2023 and December 31, 2022, and believe the reserves are adequate to cover any slow-moving or obsolete inventory. RESULTS OF OPERATIONS Sales Sales decreased by approximately 14%, from $12,698,503 in 2022 to $10,885,154 in 2023.
We have performed an evaluation of our inventory on hand as of December 31, 2024 and December 31, 2023, and believe the reserves are adequate to cover any slow-moving or obsolete inventory. 21 Results of Operations Sales Sales increased by approximately 12%, from $10,885,154 in 2023 to $12,181,971 in 2024.
As of December 31, 2023 and December 31, 2022, the allowance for credit losses on accounts receivable was $16,672 and $20,063, respectively. Prompt-pay discounts are offered to some customers; however, due to the uncertainty of the customers taking the discounts, the discounts are recorded when they are taken. 19 UNITED-GUARDIAN, INC.
As of December 31, 2024 and December 31, 2023, the allowance for credit losses on accounts receivable was $14,342 and $16,672, respectively. Prompt-pay discounts are offered to some customers; however, due to the uncertainty of the customers taking the discounts, the discounts are recorded when they are taken.
Provision for Income Taxes The provision for income taxes increased from $658,168 in 2022 to $669,408 in 2023. This increase was due to an increase in income before taxes. Our effective income tax rate was 20.6% in 2023 and 20.4% in 2022.
Provision for Income Taxes The provision for income taxes increased from $669,408 in 2023 to $857,582 in 2024. This increase was due to an increase in income before taxes. Our effective income tax rate was 20.9% in 2024 and 20.6% in 2023.
Marketable Securities Our marketable securities include investments in equity and fixed income mutual funds and Certificates of deposit. Our marketable equity securities are reported at fair value with the related unrealized and realized gains and losses included in net income. Certificates of Deposit with original maturities of more than 3 months are recorded at amortized cost.
Marketable Securities Our marketable securities include investments in equity mutual funds, Certificates of Deposit and U.S. Treasury Bills with original maturities of greater than three months. Our marketable equity securities are reported at fair value with the related unrealized and realized gains and losses included in net income. Certificates of Deposit and U.S.
Net cash used in financing activities was $459,387 and $3,123,492 for the years ended December 31, 2023 and 2022, respectively. The decrease was due to the payment of lower dividends in 2023 compared with 2022. During 2023, we paid dividends of $0.10 per share compared with $0.68 per share in 2022.
Net cash used in financing activities was $2,756,323 and $459,387 for the years ended December 31, 2024 and 2023, respectively. The increase was due to the payment of higher dividends in 2024 compared with 2023. During 2024, we paid dividends of $0.60 per share compared with $0.10 per share in 2023.
Liquidity and Capital Resources Working capital increased from $8,596,939 at December 31, 2022 to $10,718,457 at December 31, 2023. The current ratio increased from 7.3 to 1 at December 31, 2022 to 8.0 to 1 at December 31, 2023. The increase in working capital was mainly due to an increase in cash and cash equivalents.
Liquidity and Capital Resources Working capital increased from $10,718,457 at December 31, 2023 to $10,751,082 at December 31, 2024. The increase in working capital was mainly due to an increase in cash and cash equivalents, marketable securities and inventories. The current ratio decreased from 8.0 to 1 at December 31, 2023 to 6.6 to 1 at December 31, 2024.
The new Discount Program eliminates the coverage gap benefit phase, introduces pharmaceutical manufacturer discounts in the initial and catastrophic coverage phases, and lowers the cap on enrollee out-of-pocket costs. Under the new Discount Program, additional rebates are expected to be owed by pharmaceutical manufacturers due to the restructuring of the benefit periods.
The new Discount Program eliminates the coverage gap benefit phase, introduces pharmaceutical manufacturer discounts in the initial and catastrophic coverage phases, and lowers the cap on enrollee out-of-pocket costs.
These competitive products are usually sold at a lower price than our products; however, they may not compare favorably to the level of performance and quality of our products.
We continue to experience global competition from Asian and European companies that manufacture and sell products that are competitive with our products. These competitive products are usually sold at a lower price than our products; however, they may not compare favorably to the level of performance and quality of our products.
We use our historical experience and other relevant factors when developing our estimates and assumptions, which are continually evaluated. Note A, Nature of Business and Summary of Significant Accounting Policies, of the Notes to Financial Statements, included in Item 8, Financial Statements and Supplementary Data, of this Annual Report, includes a discussion of our significant accounting policies.
Note A, Nature of Business and Summary of Significant Accounting Policies, of the Notes to Financial Statements, included in Item 8, Financial Statements and Supplementary Data, of this Annual Report, includes a discussion of our significant accounting policies.
As previously discussed, the Company repositioned its marketable securities portfolio in the first half of 2023 to take advantage of the increase in interest rates.
We repositioned our marketable securities portfolio in the second half of 2023 to take advantage of the increase in interest rates.
Although we have not yet experienced any delays in receiving raw materials or an increase in shipping costs, we are aware that the situation is fluid and could impact us at any time. If that occurs, we may experience longer lead times and increased shipping costs for some of our raw materials, which may impact our future gross margins.
We continue to work with our suppliers regarding lead times and continue to closely monitor this situation. Although we have not yet experienced any delays in receiving raw materials or an increase in shipping costs, we are aware that the situation is fluid and could impact us at any time.
Accounts receivable (net of allowance for credit losses) as of December 31, 2023 increased from $1,427,576 in 2022 to $1,566,839 in 2023. The increase in accounts receivable was due to an increase in sales during the third and latter part of the fourth quarter of 2023.
The decrease in the current ratio was due mainly due to an increase in accounts payable. Accounts receivable (net of allowance for credit losses) as of December 31, 2024 decreased from $1,566,839 in 2023 to $1,428,455 in 2024. The decrease in accounts receivable was due to a decrease in sales during the fourth quarter of 2024.
The decrease in pharmaceutical-related rebates and allowances in 2023 was primarily due to a decrease in allowances for outdated material returns. Medical Lubricants Sales of our medical lubricants decreased by approximately 29% in 2023, from $2,470,163 in 2022 to $1,750,632 in 2023.
The decrease in pharmaceutical-related rebates and allowances in 2024 was primarily due to a decrease in VA Chargebacks and Medicare rebates. 22 Medical Lubricants Sales of our medical lubricants increased by approximately 16% in 2024, from $1,750,632 in 2023 to $2,028,564 in 2024.
The second factor was higher per unit overhead costs due to reduced production, which was caused by lower demand for some of the Company’s products. Operating Expenses Operating expenses decreased by approximately 4%, from $2,174,127 in 2022 to $2,078,564 in 2023. The decrease was mainly attributable to decreases in employee bonuses and depreciation expenses.
The second factor was lower per unit overhead costs due to increased production, which was caused by higher demand for some of our products. Operating Expenses Operating expenses increased by approximately 13%, from $2,078,564 in 2023 to $2,356,819 in 2024.
In connection with an upgrade to our building sprinkler system, costs of approximately $99,000 have been incurred to date. The project is expected to be completed during the first half of 2024 with additional planned expenditures of $69,000.
In connection with an upgrade to our building sprinkler system, costs of approximately $181,000 have been incurred as of December 31, 2024. The project is substantially complete and is expected to be fully complete by the end of the first quarter of 2025, with additional planned expenditures of $14,000.
The first was a decrease in sales of our cosmetic ingredients in 2023 compared to 2022 which carry a higher profit margin than our pharmaceutical products, and in 2023 the percentage of pharmaceutical sales was 45% compared with 39% in 2022.
The first was an increase in sales of our cosmetic ingredients of 32% in 2024 compared to 2023, which carry a higher profit margin than our pharmaceutical products, combined with the fact that in 2024, the percentage of cosmetic product sales as a percentage of total sales increased to approximately 45%, compared with 38% in 2023.
In connection with the Company’s 2024 growth initiative, we anticipate that operating expenses will increase modestly in 2024. Research and Development Expenses Research and development expenses decreased by approximately 5%, from $490,770 in 2022 to $463,992 in 2023. The decrease was primarily related to a decrease in payroll and payroll-related expenses.
In connection with our growth initiatives, we anticipate that operating expenses will increase modestly in 2025. Research and Development Expenses Research and development expenses decreased by approximately 2%, from $463,992 in 2023 to $456,779 in 2024. In connection with the Company’s growth initiatives, we expect our research and development expenses to increase modestly during 2025.
We do not make sales on consignment, and the collection of the proceeds of the sale of any of the Company’s products is not contingent upon the customer being able to sell the goods to a third party. Any allowances for returns are taken as a reduction of sales within the same period the revenue is recognized.
We estimate an allowance for outdated material returns based on previous years’ historical returns of our pharmaceutical products. 20 We do not make sales on consignment, and the collection of the proceeds of the sale of any of our products is not contingent upon the customer being able to sell the goods to a third party.
Gross sales of our two pharmaceutical products, Renacidin and Clorpactin, together decreased by less than 1%, from $5,929,216 in 2022 to $5,894,220 in 2023. Gross sales of Renacidin decreased by approximately 1%, from $5,181,190 in 2022 to $5,127,069 in 2023, and gross sales of Clorpactin increased by 3% from $748,026 in 2022 to $767,151 in 2023.
Gross sales of our two pharmaceutical products, Renacidin and Clorpactin, together decreased by approximately 5%, from $5,894,220 in 2023 to $5,602,259 in 2024. Gross sales of Renacidin decreased by approximately 4%, from $5,127,069 in 2023 to $4,897,331 in 2024, and gross sales of Clorpactin decreased by 8% from $767,151 in 2023 to $704,928 in 2024.
According to the supplier, it anticipates filling the Company’s outstanding orders in early March of 2024. 20 UNITED-GUARDIAN, INC. Net sales of our pharmaceutical products decreased by less than 1% in 2023 compared with the same period in 2022. The decrease in net sales was due to a decrease in certain pharmaceutical-related rebates and allowances.
We resumed filling orders in full towards the end of March 2024. Net sales of our pharmaceutical products decreased by approximately 5% in 2024 compared with the same period in 2023. The decrease in net sales was due to a decrease in gross sales combined with a commensurate decrease in certain pharmaceutical-related rebates and allowances.
The decrease in sales was primarily due to a decrease in sales of our cosmetic ingredient products, specifically a decrease of 19% in sales to our largest distributor, ASI, in 2023 compared with 2022.
The increase in sales was primarily due to an increase in sales of our cosmetic ingredient products, specifically an increase of 51% in sales to our largest distributor, ASI, in 2024 compared with 2023. In addition, sales of our medical lubricants increased by 16%, primarily due to increased orders placed by our largest customer in China.
Such allowances are determined based on historical experience under ASC Topic 606-10-32-8. We have not experienced significant fluctuations between estimated allowances and actual activity. We have distribution agreements with certain distributors of our pharmaceutical products that entitle those distributors to distribution and services-related fees. We record distribution fees, and estimates of distribution fees, as offsets to revenue.
We have distribution agreements with certain distributors of our pharmaceutical products that entitle those distributors to distribution and services-related fees. We record distribution fees, and estimates of distribution fees, as offsets to revenue.
Realized gains or losses on mutual funds are determined on a specific identification basis.
Treasury Bills with original maturities of more than 3 months are recorded at amortized cost. Realized gains or losses on mutual funds are determined on a specific identification basis.
Accounting for Financial Instruments - Credit Losses On January 1, 2023, the Company adopted ASU 2016-13, Financial Instruments – Credit Losses. In accordance with this standard, the Company recognizes an allowance for credit losses for its trade receivables to present the net amount expected to be collected as of the balance sheet date.
Accounting for Financial Instruments - Credit Losses We recognize an allowance for our trade receivables to present the net amount expected to be collected as of the balance sheet date. This allowance is based on the credit losses expected to arise over the life of the asset and are based on Current Expected Credit Losses (CECL).
Gross Profit on Sales Gross profit on sales was 50% in 2023 compared with 53% in 2022. The decrease in gross profit was primarily due to two factors.
Industrial Products There were no sales of our industrial products during 2024 due to this product line being discontinued after the second quarter of 2023. Gross Profit on Sales Gross profit on sales was 53% in 2024 compared with 50% in 2023. The increase in gross profit was primarily due to two factors.
We generated cash from operations of $3,144,480 in 2023 compared with $2,525,169 in 2022. The increase in 2023 was primarily due to a decrease in inventories and an increase in accounts payable. Net cash provided by investing activities was $4,727,577 for the year ended December 31, 2023 compared with $897,562 for the year ended December 31, 2022.
We generated cash from operations of $3,466,251 in 2024 compared with $3,144,480 in 2023. The increase in 2024 was primarily due to an increase in net income, offset by increases in inventories and deferred income taxes.
Net gain (loss) on Marketable Securities For the year ended December 31, 2023, the Company recorded net gains on its marketable securities portfolio of $81,095, compared with recording net losses of $1,046,245 in 2022.
Treasury Bills and Certificates of Deposit to take advantage of the increase in interest rates. 23 Net Gain on Marketable Securities For the year ended December 31, 2024, we recorded net gains on our marketable securities portfolio of $26,989 compared with net gains of $81,095 in 2023.
The continued supply chain instability, primarily caused by military tensions in the Middle East, has impacted vessels’ access to the Red Sea and Suez Canal. The Company is working closely with its suppliers regarding lead times, and continues to closely monitor this situation.
Impact of Global Supply Chain Instability, Inflation and Tariffs The continued supply chain instability, primarily caused by military tensions in the Middle East, continues to impact vessels’ access to the Red Sea and Suez Canal. Shipping experts say this crisis may last into the first half of 2025.
The increase was primarily due to the Company repositioning its marketable securities portfolio and selling most of its equity and fixed income mutual funds. The proceeds from these sales were used to purchase U.S. Treasury Bills and certificates of deposit to take advantage of the increase in interest rates in 2023.
In addition, during 2024 we held more funds in money market accounts which yielded higher interest income compared to 2023. During the second half of 2023, we repositioned our marketable securities portfolio, liquidating most of our equity and fixed income mutual funds. The proceeds from these sales were used to purchase U.S.
Critical Accounting Policies Our financial statements have been prepared in accordance with Generally Accepted Accounting Principles in the United States of America (“US GAAP”). Preparation of financial statements requires us to make estimates and assumptions affecting the reported amounts of assets, liabilities, revenues, and expenses and the disclosure of contingent assets and liabilities.
Preparation of financial statements requires us to make estimates and assumptions affecting the reported amounts of assets, liabilities, revenues, and expenses and the disclosure of contingent assets and liabilities. We use our historical experience and other relevant factors when developing our estimates and assumptions, which are continually evaluated.
In addition, sales of the Company’s medical lubricants decreased by 29%, primarily due to a decrease in demand in 2023 due to foreign customers’ overstocking during 2022. Cosmetic Ingredients Sales of our cosmetic ingredients decreased by approximately 20%, from $5,167,909 in 2022, to $4,132,334 in 2023.
Cosmetic Ingredients Sales of our cosmetic ingredients increased by approximately 32%, from $4,132,334 in 2023 to $5,438,262 in 2024. The increase was primarily due to an increase in sales to ASI.
These return policies are in conformance with standard pharmaceutical industry practice. We estimate an allowance for outdated material returns based on previous years’ historical returns of our pharmaceutical products.
These return policies are in conformance with standard pharmaceutical industry practice.
Our sales, as reported, are net of these rebates, some of which are estimated and are recorded in the same period that the revenue is recognized. In August of 2022, the Inflation Reduction Act (“IRA”) was signed into law.
Our sales, as reported, are net of these rebates, some of which are estimated and are recorded in the same period that the revenue is recognized. On January 1, 2025, the Centers for Medicare & Medicaid Services (“CMS”) implemented a new Medicare Part D Manufacturer Discount Program (“Discount Program”), which replaced the prior CGDP.
In addition, sales to our other four distributors decreased by a net of approximately 26%, while sales to four of our small direct cosmetic ingredient customers increased by approximately 71%. We continue to experience global competition from Asian and European companies that manufacture and sell products that are competitive with our products.
This increase was offset by sales to our other four distributors, whose sales decreased by a net of approximately 49%, while sales from two of our small direct cosmetic ingredient customers increased by approximately 19%. This decrease was primarily due to reformulations.
At this time, the Company is unable to predict what future impact this new program will have on its financial condition; however, it submitted information to CMS requesting to be classified as a “specified small manufacturer.” If designated as such, the Company would be entitled to a multi-year phase-in period during which it would pay a lower percentage discount on drugs dispensed to beneficiaries.
On January 31, 2024, we were notified by CMS that we qualified as a “specified small manufacturer” and would be entitled to a multi-year phase-in period during which we would pay a lower percentage discount on drugs dispensed to beneficiaries.
Sexual Wellness Ingredients There were no sales of our sexual wellness ingredients in 2023, since the Company only began its marketing efforts for those products in mid-2023 and it is not unusual for it to take a year or more for new ingredients to find their way into new products in the marketplace.
The increase in sales was driven by increased demand from one of our larger contract manufacturer customers located in China. Sexual Wellness Ingredients There were no sales of our sexual wellness ingredients in 2024, since we only began our marketing efforts for those products in mid-2023.
Removed
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations Impact of Global Supply Chain Instability and Inflation The increased raw material prices that the Company experienced during 2022 and the beginning of 2023 stabilized during the latter part of 2023 as inflation started to decline.
Added
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations You should read the following discussion and analysis in conjunction with our financial statements and related notes contained elsewhere in this Annual Report. This discussion contains forward-looking statements that involve risks, uncertainties and assumptions.
Removed
During 2023 and 2022, we did not record an impairment charge regarding our investment in marketable securities because management believes, based on an evaluation of the circumstances, that any decline in fair value below the cost of certain of our marketable securities is temporary.
Added
Our actual results may differ materially from those anticipated in these forward-looking statements as a result of a variety of factors discussed in this report and those discussed in other documents we file with the SEC. In light of these risks, uncertainties and assumptions, readers are cautioned not to place undue reliance on such forward-looking statements.
Removed
The IRA made significant changes to the current Medicare Part D benefit design as it relates to discounts available to enrollees from pharmaceutical manufacturers of brand name drugs. Beginning on January 1, 2025, the Centers for Medicare & Medicaid Services (“CMS”) will implement a new Medicare Part D Manufacturer Discount Program (“Discount Program”), which will replace the current CGDP.
Added
These forward-looking statements represent beliefs and assumptions as of the date of this report. While we may elect to update forward-looking statements at some point in the future, we specifically disclaim any obligation to do so, even if our estimates change. Past performance does not guarantee future results.
Removed
On January 31, 2024, the Company was notified by CMS that it qualified as a specified small manufacturer and will receive the discount phase-in discussed above. 18 UNITED-GUARDIAN, INC.
Added
Executive Level Overview We specialize in manufacturing cosmetic ingredients, pharmaceuticals, medical lubricants, and sexual wellness ingredients through our Guardian Laboratories division. With a long-standing reputation for delivering high-quality specialty products, we are committed to serving diverse markets with innovative solutions.
Removed
This allowance is based on the credit losses expected to arise over the life of the asset and are based on Current Expected Credit Losses (CECL). Implementation of this standard did not have a material effect on the Company’s financial statements.
Added
As part of our strategic focus, we discontinued our specialty industrial products line in mid-2023 due to low sales and limited growth potential. This shift allows us to concentrate on higher-value product categories with greater market opportunities.
Removed
A significant part of the decrease was due to the decrease in sales to ASI.
Added
In October 2023, we took a significant step toward expanding our presence in the sexual wellness market by partnering with Brenntag Specialties, a global leader in chemicals and ingredients distribution. Under this agreement, Brenntag will distribute our new Natrajel line of sexual wellness ingredients across North and South America.
Removed
Based on information provided to the Company by ASI, the reasons for the decrease during 2023 was due to 1) decreased demand for the Company’s products in China; 2) increased competition from lower-priced local competitors, especially Asian producers; and 3) customers working off excess stock, maintaining lower inventory levels and changing ordering patterns to just in time.
Added
While we reported no sales of this product in 2024, we anticipate beginning manufacturing and revenue generation in 2025. 18 With a refined product portfolio and strategic partnerships, we are well-positioned for future growth, leveraging our expertise in specialty ingredients to capitalize on emerging market opportunities.
Removed
The primary reason for the decrease in Renacidin sales was due to the Company’s packaging supplier of Renacidin temporarily ceasing manufacturing during the fourth quarter of 2023. According to information provided to the Company from its supplier, this temporary shutdown was done to perform required maintenance and address observations made by the FDA at their facility.
Added
If that occurs, we may experience longer lead times and increased shipping costs for some of our raw materials, which may impact our future gross margins.
Removed
The decrease in sales was driven by decreased demand from one of our larger contract manufacturer customers located in China, who had built up inventory levels during 2022 to accommodate their customers’ delivery concerns.
Added
The Trump administration has communicated its intention to impose tariffs on many products imported from China, Canada and Mexico. Some of those tariffs went into effect on March 4, 2025. Since that time the Trump administration has increased some of those tariffs and postponed others. It has threatened to levy tariffs on additional countries, including those of the European Union.
Removed
We are hopeful we will begin to receive orders for these products in 2024. Industrial Products Sales of our industrial products decreased by 56% in 2023 compared with 2022. The decrease in sales was due to this product line being discontinued after the second quarter of 2023 due to low sales volume with minimal growth.
Added
Many of the countries on which those tariffs have been levied have imposed their own retaliatory tariffs or threated to impose tariffs on goods they import from the U.S. The tariff situation remains fluid and is subject to modification at any time. At this time, it is difficult to determine the impact of these tariffs on our business.
Removed
In connection with the Company’s growth initiatives that are expected to be put into place in 2024, the Company expects its research and development expenses to increase modestly during 2024. 21 UNITED-GUARDIAN, INC. Investment Income Investment income increased by approximately 30%, from $236,695 in 2022 to $306,651 in 2023.
Added
We will continue to monitor this situation closely. While we obtain most of our raw materials and lab supplies from domestic sources, we have three suppliers that obtain their raw materials from China. These materials are not purchased by us in large quantities, and we have adequate stock on hand to cover the next six months.
Removed
In addition, in connection with the Company changing its dividend policy during 2023, cash flow increased and the additional monies were used to purchase both U.S. Treasury Bills and certificates of deposit.
Added
In addition, we have one direct raw material supplier in China; however, the raw materials we purchase from this supplier are not in large quantities and the effect of this tariff would not materially impact the pricing of our products.
Removed
The reason for the fluctuation was due to the following factors: 1) during 2022, the Company’s fixed income mutual funds (which made up approximately 90% of the investment portfolio) lost a significant amount of value due to increases in interest rates, and those unrealized losses were recorded during 2022; and 2) a majority of those mutual funds were sold during the second quarter of 2023, and while most of the losses had already been recorded in 2022, there were some increases in market value at the time of these sales, which created unrealized gains in that period.
Added
Many of our products are used in the formulation of finished products that are manufactured in China and then imported back into the United States (“U.S.”) for sale. There is the possibility that the tariffs levied on these finished products could result in an increase in their price, which could potentially impact demand for these products in the U.S.
Removed
The increase in net cash provided by investing activities was mainly due an increase in the sales of the Company’s marketable securities in the first half of 2023 compared with 2022. The proceeds from these sales were primarily reinvested in short-term U.S. Treasury Bills, which are included in cash and cash equivalents. 22 UNITED-GUARDIAN, INC.
Added
Due to the continued uncertainty of this, any other tariffs that may be imposed, there continues to be uncertainty regarding the future impact of any additional tariffs on our operations or financial results. Critical Accounting Policies Our financial statements have been prepared in accordance with Generally Accepted Accounting Principles in the United States of America (“US GAAP”).

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