UNITED-GUARDIAN, INC.

SPECIAL NOTE ABOUT FORWARD LOOKING STATEMENTS

This Annual Report on Form 10-K (“Annual Report”) contains both historical and forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which provides a safe harbor for forward-looking statements by the Registrant about its expectations or beliefs concerning future events, such as financial performance, business prospects, and similar matters. The Registrant desires to take advantage of such "safe harbor" provisions and is including this statement for that express purpose. Words such as "anticipates", "believes", "expects", "intends", "future", and similar expressions identify forward-looking statements. Any such forward-looking statements in this report reflect the Registrant's views as of the date of filing of this report with the United States Securities and Exchange Commission (the “SEC”) with respect to future events and financial performance, and are subject to a variety of factors that could cause the Registrant's actual results or performance to differ materially from historical results or from the anticipated results or performance expressed or implied by such forward-looking statements. Because of such factors, there can be no assurance that the actual results or developments anticipated by the Registrant will be realized or, even if substantially realized, that they will have the anticipated results. The risks and uncertainties that may affect the Registrant's business include, but are not limited to: economic conditions, governmental regulations, technological advances, pricing and competition, acceptance by the marketplace of new products, retention of key personnel, the sufficiency of financial resources to sustain and expand the Registrant's operations, and other factors described in this report and in prior filings with the SEC. Readers should not place undue reliance on such forward-looking statements, which speak only as of the date hereof, and should be aware that except as may be otherwise legally required of the Registrant, the Registrant undertakes no obligation to publicly revise any such forward-looking statements to reflect events or circumstances that may arise after the date hereof. Past results are no guaranty of future performance.

All references in this Annual Report to “sales” or “Sales” shall mean “net sales” unless specifically identified as “gross sales.”

PART I

Item 1. Business.Business

(a)IntroductionOVERVIEW

United-Guardian, Inc. ("United", "Registrant",(“Registrant” or “Company”) is a Delaware corporation that, through its Guardian Laboratories division, conducts research,manufactures and markets cosmetic ingredients, pharmaceutical products, medical lubricants and sexual wellness ingredients. Prior to July 1, 2023, the Company manufactured and reported sales of a line of specialty industrial products; however, this product development,line was discontinued after the second quarter of 2023 due to low sales volume with no growth prospects. 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. Although there were no sales of these products during 2023, the Company anticipates that it will begin manufacturing and marketingreporting sales of cosmetic ingredients, pharmaceuticals, medicalthis new line of products in 2024.

The Company conducts various research and proprietary specialty industrial products.development activities. The Company’s research and development department modifies, refines,primarily develops new and expands the uses of existing products for additional uses and markets. It alsounique cosmetic ingredients. The Company develops new products using natural and environmentally friendly raw materials, which is importanta 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. 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.

United'sOur predecessor entity, United International Research, Inc. ("UIR"), was founded and incorporated in New York in 1942 by Dr. Alfred R. Globus, United'sthe 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. On September 14, 1987, United-Guardian, Inc. (New York), a New York corporation, was merged with and into a newly formed Delaware corporation by the same name, United-Guardian, Inc., for the purpose of changing the domicile ofto the Company toState of Delaware.

The Company has a broad rangecornerstone of our business is our product innovation. 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 many of whichthat fill unmet market needs and have unique properties.

Our products are currently marketedsold into stable and some of which are still in the researchgrowing markets such as personal care, medical devices and development stage. Of the products being actively marketed, the two largestpharmaceuticals. Our current product lines are the Lubrajel® line ofofferings include cosmetic ingredients, and medical lubricants, which accounted for 60% ofpharmaceuticals and sexual wellness ingredients.

Our current product offerings are segregated into the Company's gross sales in 2021, and Renacidin® Irrigation Solution (“Renacidin"), a pharmaceutical product that accounted for 34% of the Company's gross sales in 2021.following categories:

UNITED-GUARDIAN, INC.

Unless indicated otherwise, all references

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”). 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 to “sales” or “Sales” shall mean net sales. When changes are shown as percentages,on Form 10-K and is not incorporated by reference in this document. 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 number is approximate and has been rounded from one decimal place to the nearest whole number.SEC.

(b) Description of BusinessDESCRIPTION OF THE BUSINESS

The Company manufactures and markets cosmetic ingredients, pharmaceuticals, medical lubricants and sexual wellness ingredients. Prior to July 1, 2023, the Company manufactured and reported sales of a line of specialty industrial products. Itproducts; however, this product line was discontinued after the second quarter of 2023 due to low sales volume with no growth prospects. 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. 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 conductsconduct research and development, primarily related to the development of new and unique cosmetic ingredients. The Company focusesingredients and medical lubricants. We focus on the development of products that fill unmet market needs, have unique properties, and use proprietary technology that the Companywe typically protectsprotect as trade secrets rather than with patents. Many of the Company'sour products are marketed through collaborative distribution agreements with larger companies.

The cosmetic ingredients manufactured by the Company are marketed to end users through the Company'sour worldwide network of marketing partners and distributors and are currently used by many of the major manufacturers of cosmetic products. 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. 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 ships itsCompany’s Lubrajel products in the new natural line have been certified by the Cosmetic Organic and Natural Standard (“COSMOS”). This standard is recognized globally by the cosmetic industry. We ship our cosmetic ingredients to its marketing partnersour distributors Ex Works (EXW)(“EXW”) from itsour facility in Hauppauge, New York. Those marketing partnersdistributors in turn resell those products to their customers, who are typically the manufacturers and marketers of cosmetic and personal care products, and who in turn utilize the Company’s 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 the discretion of the Company.

The Company’sOur pharmaceutical products are sold primarily to several full-line drug wholesalers which in turn supply those products to pharmacies, physicians, and hospitals. The Company arrangesWe arrange for, and coverscover the cost of, shipping itsour pharmaceutical products, and sales of those products are final when shipped. 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.

The Company operatesWe operate in one business segment. The Company’sOur current products are separated into four distinct product categories: cosmetic ingredients, pharmaceuticals, medical products,lubricants and industrial products.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.

The Company’sOur cosmetic ingredients are currently marketed globally by five marketing partners,distributors, of which Ashland Specialty Ingredients (“ASI”), a business segment of Ashland, Inc., is the largest. ASI manufactures and markets globally an extensive line of personal care and pharmaceutical additives and various other specialty products. The Company’sWe sell our cosmetic ingredients are sold directly to those marketing partners,distributors, which in turn resell thoseour products to their customers for use in the formulation of one or more of the customers’ personal care and cosmetic products. The Company’sOur non-pharmaceutical medical products (referred to hereinafter as the Company’s “medical products”) and its specialty industrial productslubricants are sold directly by the Company to marketers of finished medical products or to the contract manufacturers utilized by those marketers. The Company’s marketing efforts for itsWe market our pharmaceutical products are accomplished primarily through itsour dedicated Renacidin website and by internet advertising.website. The pharmaceutical products are sold to hospitals and pharmacies primarily through full-line drug wholesalers, which purchase the Company’sour products outright for resale to their customers. The CompanyWe also sellssell a small quantity of pharmaceutical products directly to hospitals and pharmacies. The Company'sOur products are sold under trademarks or trade names owned by the Company,that we own, some of which are registered with the United States Patent and Trademark Office as well as with comparable regulatory agencies in some foreign countries. The Company hasWe maintain a corporate website at www.u-g.com, and a specific website for Renacidin at www.renacidin.com. 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.

UNITED-GUARDIAN, INC.

IMPACT OF THE CORONAVIRUS PANDEMIC

While the coronavirus pandemic (“pandemic”) continuesAll references in this Annual Report to impact certain areas of the Company’s operations, the substantial impact the pandemic had on Company sales in 2020 significantly lessened during 2021. While the Company believes that sales of its cosmetic ingredients are still being negatively impacted, the sales situation has improved substantially, and the current impact is coming more from increased shipping costs and higher raw material costs, which may have some future impact on the Company’s profit margins in upcoming quarters. During 2021 it was more difficult to ship the Company’s products due to a shortage of truck drivers and trucks, and limited availability of shipping vessels. This created some delays in having orders picked up, even though the Company’s products were available to ship. The shortage of truck drivers and shipping vessels is expected to continue into 2022 but improve“sales” or “Sales” shall mean “net sales” unless specifically identified as the year progresses. The Company has been able to minimize the impact on customers by making them aware of longer lead times that may be necessary as a result of these issues.

Sales of the Company’s non-pharmaceutical medical products (“medical products”) had also been negatively impacted by the pandemic in 2020, but those impacts lessened as well in 2021. Sales of the Company’s pharmaceutical products were not impacted by the pandemic in 2020 or in 2021.

The pandemic has not significantly affected the ability of the Company to obtain raw materials, but it has made some of those materials more expensive and created longer lead times for some of them. The increased costs of some of these raw materials may impact the Company’s gross profit margins in the future on certain products. The Company has been able to maintain production throughout the pandemic.

As a result of the lingering effects of the coronavirus pandemic as described above, there continues to be uncertainty in regard to the future potential impact of the pandemic on the Company’s operations or financial results. While the impact on the Company’s’ sales lessened considerably in 2021, the Company believes that it is still unable to provide an accurate estimate or projection as to what the future impact of the pandemic will be on the Company’s future operations or financial results. The Company does not expect the carrying value of its assets or its liquidity to be impaired by the coronavirus pandemic.“gross sales.”

PRODUCTS

As stated above, the Company operateswe operate in one business segment, and itsour current product lines are separated into four distinct product categories:

COSMETIC INGREDIENTS

The cosmetic ingredients we manufacture are marketed and sold to end users through our worldwide network of distributors. 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. 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. Our other cosmetic ingredient distributors are Azelis UK Ltd in theUnited 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.

We ship our cosmetic ingredients to our distributors EXW from our facility in Hauppauge, New York. The distributors resell the products to their customers, which are typically major manufacturers and marketers of cosmetic and personal care products. They 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.

Since our Lubrajel hydrogels are well-known and established specialties, we believe that in the event ASI or any of our other cosmetic product distributors were to cease marketing and selling our products, alternative distribution agreements could be signed with other distributors of cosmetic ingredients in the affected territory or territories. These new distributors would continue supplying products to customers currently using our products, without any significant interruption of sales. If necessary, we would also be able to sell directly to the end users of our products until a new distribution arrangement was put in place.

PRODUCTS - COSMETIC INGREDIENTS:

LUBRAJEL® is an extensive line of water-based moisturizingmultifunctional hydrogel formulations designed to mainly provide sensory enhancement, lubrication, and lubricating gel formulations that are used as ingredients in personal care products (primarily cosmetic/skincare). In the personal care industry they are used primarily as moisturizers, viscosity modifiers, and as bases for other personal care products, and can be found as an ingredient in skin creams, moisturizers, makeup, and body lotions. Included in the many different formulations of Lubrajel are variations that use different types of preservatives, including the Company’s line of paraben-free products, as well as some, like Lubrajel PF, Lubrajel Oil PF, and Lubrajel II XD PF, which are all preservative-free.

LUBRAJEL NATURAL was the first product in a line of Lubrajel products for cosmetic use that are produced using only ingredients that are considered “natural”. This product, as well as the additional “natural” products under development (see “Development Activities” below) are based on natural polysaccharides, which contribute moisturization, emulsion stabilization, and emolliencytexture to personal care products, particularly creams and lotions. Ecocert, oneproducts. Some of the global organizations authorized to certify naturalLubrajel 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 organicsunscreens. The Lubrajel products has certified thatare also used in makeup products such as primers and foundations. Each Lubrajel Natural complies withproduct offers unique benefits for the Cosmetic Organicformulation of skin care and Natural Standard (“COSMOS”), indicating that thecolor cosmetic products. The basic product is suitable for use in naturalline includes Lubrajel CG, Lubrajel DV, Lubrajel IIXD, Lubrajel MS, Lubrajel NP and organic cosmetic products.Lubrajel Oil.

UNITED-GUARDIAN, INC.

LUBRAJEL MARINE™ wasTo 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.

In the second productlast 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 the Company developed for its new line of “natural” cosmetic ingredients. It was formulated using naturally-derived polysaccharides, with some of the ingredients sourced from marine vegetation. This product was developed jointly with ASI, and for that reason is being marketed globally on an exclusive basis by ASI. Like the originalare considered “natural.” The Lubrajel Natural, this product has received COSMOS certification for use in natural and organic cosmetic products. It is being actively marketed by ASI, and while sales have not attained the levels that the Company had originally hoped for, the Company is still optimistic that sales will increase as the interest in natural products in the marketplace continues.new natural line have been certified by the Cosmetic Organic and Natural Standard (“COSMOS”). This standard is recognized globally by the cosmetic industry.

Total salesThe new natural line of products includes Lubrajel Natural, Lubrajel Marine, Lubrajel Oil Natural and Lubrajel Terra. All of the Company'snatural 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. Each one offers a unique skin feel and improves the sensory characteristics of personal care formulations.

In addition to the Lubrajel line of products, we also manufacture the following additional cosmetic ingredients, increased by $2,598,128 (61%) for the year ended December 31, 2021 when compared with 2020, and accounted for approximately 49% of total Company sales in 2021 compared with 39% in 2020. The increase was due primarily to an increase in sales of Lubrajel cosmetic ingredients to ASI, which the Company believes was due mainly due to the global economies gradually recovering from the impact of the coronavirus pandemic during 2021.

Each of the following cosmetic ingredients accounted for less than 2%10% of the Company’stotal sales in 2021, listed in descending order of sales.2023:

LUBRAJEL II XDB-122™ is a versionpowdered lubricant used in the manufacture of Lubrajel that was developed to becertain cosmetics, such as pressed powders, eyeliners, and rouges, as well as some industrial products. The product acts as a direct replacement for onebinder, increases water-repellency and drop strength, and lowers the coefficient of friction in the competitive products to Lubrajel. Therein which it is a paraben-free version of this product known as Lubrajel II XD Free, and the Company recently completed the development of a preservative-free version of this product, which is being marketed as LUBRAJEL II XD PF.used.

ORCHID COMPLEX™ is an oil-based extract of fresh orchids. It is characterized by its excellent lubricity, spreadability, light feel, and emolliency. 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.

LUBRASIL™ II SBis 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.

B-122™ is a powdered lubricant used inSales of our cosmetic ingredients represented approximately 38% and 41% of our total sales for the manufacture of certain cosmetics, such as pressed powders, eyeliners,years ended December 31, 2023 and rouges, as well as some industrial products. The product acts as a binder, increases water-repellency and drop strength, and lowers the coefficient of friction in the products in which they are used.2022, respectively.

KLENSOFT™We believe that there is a surfactant (a surface-active agent, such as a soap or detergent) that can be used in shampoos, shower gels, makeup removers, and other cosmetic formulations. The marketing of Klensoft had been discontinued in 2021 due to a significant increase in raw material costs which made the product difficult to market. However, there has been recent interest in this product from a previous customer, despite the higher costs, and the Company may make limited quantities of this product available in the future depending on demand.

ORCHID COMPLEX™ is an oil-soluble base for skin creams, lotions, cleansers, and other cosmetics. It is an extract of fresh orchids modified by stabilizers, and is characterized by its excellent lubricity, spreadability, light feel, and emolliency. 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. It is also a superior emollient for sunscreens, vitamin creams, toners and skin serums.

The Company believes that its ability to maintain and/or increase sales of its cosmetic ingredients will depend on (a) the ability and determination of its marketing partners, especially its largest marketing partner, ASI,potential to continue to aggressively promote the Company’s products, particularly to new customers, and to find new marketing opportunities for those products; (b) the Company's success in developing new and innovative cosmetic ingredients, including new types of water-based moisturizers and lubricants; developing new applications for existing products; and (c) the ability of the Company to compete with manufacturers of lower-cost competitors to Lubrajel that have negatively impactedgrowing the sales of the Company’sour cosmetic ingredients over the past few years. In particular, the Company hasthrough new product development, development of new product applications, development of additional claim substantiations, and geographic expansion. Although we have experienced significant pricing pressure from competitivelow-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, being marketedthe reliability of supply and the outstanding technical support.

MEDICAL LUBRICANTS

Our medical lubricants are sold directly to manufacturers and marketers of finished medical products or to the contract manufacturers utilized by some Asian manufacturers. These lower-cost competitive productsthose companies. Sales of our medical lubricants are likelyshipped EXW from our facility in Hauppauge, New York. Sales are deemed final upon shipment, and we have no obligation to continue to negatively impactrepurchase or allow the Company’s sales and profit margins on somereturn of its products in certain geographic areas.these goods unless they are defective.

UNITED-GUARDIAN, INC.

The Company believes that there is still potential to expand the sales of its cosmetic ingredients through new product development, modifications to make some of its current products more competitive, additional claim substantiation, and geographic expansion. The Company believes that its strong brand identity, reliability, and reputation for supplying quality products will be advantageous in its efforts to compete with the growing number of lower-cost competitors, but that it will still be necessary to be more competitive with its product pricing in certain geographic areas in order to maintain and grow its market share.

PRODUCTS –MEDICAL LUBRICANTS

LUBRAJELOur medical lubricants are also sold under the Lubrajel brand since they are hydrogel formulations designed to provide sensory enhancement and lubrication to medical products. The Lubrajel medical lubricant products are primarily used in catheters, condoms, personal lubricants and in oral care applications such as mouthwashes.

Currently, we offer medical lubricant products for catheter lubrication, medical devices, condom lubrication and oral care. In addition, we develop and sell customized exclusive products for all these applications.

Our medical lubricants include Lubrajel MG, Lubrajel MGL, Lubrajel RRCG, Lubrajel RR, Lubrajel RC, Lubrajel RA, Lubrajel Fluid, Lubrajel LC, Lubrajel BA, and RC Lubrajel FACO.

Lubrajel MG and Lubrajel MGL are both water-based gels used primarily asour standard medical lubricants for urinary catheters. They are special gradesand can be applied to catheters, thermometers and other instruments to ensure ease of use and patient comfort. Our R-line of products, Lubrajel thatRRCG, Lubrajel RR, Lubrajel RC and Lubrajel RA can withstand sterilization by gamma radiation, which is one of the methods of terminally sterilizing medical and hospital products. Lubrajel RR was the original radiation resistant Lubrajel product. Lubrajel RC was developedFluid is designed as a lower-costan alternative to traditional silicone-based lubricants. The water-based formula offers easy clean up and is non-staining. It is compatible with traditional condom release powders which are used during the manufacture of latex condoms.

Lubrajel RR for those customers who are in more cost-sensitive markets. Sales ofLC, Lubrajel RRBA and Lubrajel RC decreased in 2021 compared with 2020, mostly due to a 90% decrease in sales of Lubrajel RC. The Company believes that the decrease was primarily the result of the loss of one of the Company’s larger medical product customers due to a reformulation. The combined sales of both products accounted for 4% of the Company’s sales in 2021. The Company is currently working with two companies thatFACO are evaluating this product, which may result in an increase in sales if one or both of those customers decide to proceed with purchasing this product.

LUBRAJEL MG is the original form of Lubrajel, developed as a medical lubricant in the 1970s. It is used by many medical device manufacturers for lubricating urinary catheters, pre-lubricated enema tips, and other medical devices. Sales for this product increased in 2021 compared with 2020 due to an increase in sales to one of the Company’s larger customers for this product located in China. Sales to this customer were impacted significantly in 2020 due to the pandemic, but sales levels increased as China’s economy began to emerge from the pandemic in 2021.

LUBRAJEL LC and LUBRAJEL FA are Lubrajelhydrogel formulations that were developed for use in oral care applications. Sales of these products increased in 2021 compared with 2020, primarily due to an increase in orders from the Company’s primary customers for these products, which the Company believes was due to improving conditions related to the pandemic.

LUBRAJEL FLUID is a very low viscosity form of Lubrajel that was developed to provide superior lubrication in water-soluble products. It was specifically developed, and is currently in limited use, as a replacement for silicone oils in pre-lubricated condoms. The Company has only one customer for this product, and sales of this product did not contribute significantly to the Company’s overall sales.

Sales of allmedical lubricants represented approximately 16% and 19% of our total sales for the medical grades of Lubrajel decreased by 5% in 2021 compared with 2020years ended December 31, 2023 and accounted for approximately 14% of the Company’s gross sales in 2021 compared with approximately 19% in 2020. The decrease was due primarily to the loss one customer.2022, respectively.

UNITED-GUARDIAN, INC.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

RENACIDIN® is a prescription drug product that is usedWe sell our pharmaceutical products primarily to preventfull-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 also sell a small quantity of pharmaceutical products directly to dissolve calcifications in urethral cathetershospitals and inpharmacies. We arrange for, and cover the urinary bladder. It is currently marketed in a plastic 30 mL single-dose bottle. While the gross profit generated by Renacidin increased in 2021 compared with 2020, grosscost of, shipping our pharmaceutical products, and sales of Renacidin decreased by approximately 6% in 2021 compared with 2020, and represented approximately 34% of total Company gross sales. The decrease in gross sales was due to the Company’s decision in December 2020 to terminate its participation in the Medicaid Drug Rebate Program (MDRP) and the Section 340(B) Pricing Program (340B). The Medicaid Drug Rebate Program required the Company to pay a significant rebate to the various states where Renacidin was provided to Medicaid patients, and the 340B program required the Company to sell their product at a deeply discounted price. Due to the overly burdensome nature of the Medicaid rebates and the deeply discounted pricing associated with the 340B Program, the Company terminated its participation in the MDRP and the 340B Programs, effective December 31, 2020.

CLORPACTIN® WCS-90 is an antimicrobial product used primarily in urology to treat infections in the urinary bladder. It is also used in surgery for treating a wide range of localized infections in the peritoneum (the lining of the abdominal cavity), as well as the eye, ear, nose and throat, and sinuses. The product is a powder that is mixed with water by the end user and used as a solution. It is also a powerful disinfectant, fungicide, and deodorizer. In 2021 sales of Clorpactin increased by 16% and represented approximately 5% of the Company’s gross sales.

Sales of the Company’s pharmaceuticalthose products are final when shipped, andshipped. The pharmaceutical products are returnable only atunder specific circumstances in accordance with pharmaceutical industry standards, such as if the discretion of the Company unlessproducts are (a) they are found to bedamaged when received; (b) defective; (b) the product is damaged in shipping; (c) the product is too close to itstheir expiration datedates to sell; or (d) the product is past itswithin a year after their expiration date by no more than one year.dates. These return policies are in conformance with standard pharmaceutical industry practice.

INDUSTRIAL PRODUCTS - PHARMACEUTICALS

DESELEXRENACIDIN™is a sequestering and chelating agentprescription drug approved by the FDA that is used primarily asto prevent and to dissolve calcifications in urethral catheters. We maintain a replacement for phosphates in the manufacture of detergents. It also has some use in personal care products as a chelating agent in shampoos and body washes. Sales ofspecific website dedicated to this product decreased by less than 1% in 2021 compared to 2020 and represented less than 1% of Company sales. In March 2022 the Company discontinued this product due to minimal sales and a significant increase in raw material costs.at www.renacidin.com.

THOROCLENSCLORPACTIN® WCS-90 (“Clorpactin”) is a chlorine-based industrial cleanser manufactureddrug that is marketed as a topical antimicrobial and packaged by the Company foris also used in urology. It is also a small company in New England. Sales of this product increased in 2021, but, as with Deselex, represented less than 1% of Company sales.powerful disinfectant, fungicide, and deodorizer.

DEVELOPMENT ACTIVITIESOur pharmaceutical products represented 45% and 39% of our total sales for the years ended December 31, 2023 and 2022 respectively.

In coordination with, and with input from, its marketing partners,We believe that there is potential to grow the Company's research and development department developssales of our pharmaceutical products that are used in many different industries, including the personal care (including cosmetic), pharmaceutical, medical, health care, and specialty chemical industries. These products are in various stages of development, some currently marketable and some in the very early stages of development requiring a substantial amount of development work to bring them to market. Research is also being done on new uses for currently marketed products.

Prior to initiating research and development work on a product, the Company consults with its global marketing partners to determine the marketability of the product, including the potential market size and the most effective method of marketing the product. After that, the research and development department will determine whether the product can be successfully developed, including (a) laboratory refinements and adjustments to suit the intended uses of the product; (b) stability studies to determine the effective shelf life of the product and suitable storage and transportation conditions; and (c) laboratory efficacy tests to determine the effectiveness of the product under different conditions. If development proves feasible, the Company will then determine whether production and sales costs make it feasible to bring the product to market.through geographic expansion.

UNITED-GUARDIAN, INC.

If the initial development work is successful, and the estimated costs of further development are acceptable to the Company, further development work to bring the product to market will continue, including scaling up from laboratory production batches to pilot batches to full-scale production batches. In the case of drug products or medical devices, significant additional work would have to be done, including studies to determine safety and effectiveness, preparation of an Investigational New Drug (IND) Application, and finally the filing of an NDA. Because of the high cost of bringing new drugs or medical devices to market, as well as the Company’s limited resources, the Company does not currently have plans to develop any new drugs or medical devices, and intends to focus its research and development efforts on the development of new and innovative products for the personal care and medical (non-drug) markets.

While there can be no assurance that any particular project will result in a new marketable product or a commercially successful product, the Company believes that a number of its development projects, including those discussed below, may have commercial potential if the Company's development efforts are successful.

The Company's major research focus is on the development of new and unique cosmetic ingredients. The following are some of the projects on which the Company is currently working:

LUBRAJEL OIL PF: This product was developed as a result of the high demand for the Company’s very popular Lubrajel Oil. Unlike that product, this formulation is preservative-free, which enables formulators to use their own preservative systems without having to account for preservatives already incorporated into the product. This approach has been very successful with the Company’s Lubrajel PF, its first preservative-free product, and the Company is hopeful that a preservative-free formulation of Lubrajel Oil will also be successful. The Company has launched this product exclusively with Ashland, which launched the product globally at the end of 2020. Since the launch, Lubrajel Oil PF has seen success with many customers. The Company has seen increased orders which demonstrates how quickly customers have been able to incorporate Lubrajel Oil PF into their formulations.

LUBRAJEL II XD PF: Like Lubrajel Oil PF, this product was developed to meet the continuing market demand for preservative-free products. Current formulators are moving from conventional preservative systems to more natural methods of preservation. Eliminating the preservatives enables a formulator to choose the preservative system that is best for their final application. This product was launched by ASI in early 2021, and has already been qualified by some customers in the EMEA market. The Company received its first commercial order for this product in the first quarter of 2022.

OIL/WAX HYDRATION: The concept for this product is an anhydrous textured gel that can be added to rinse-off formulas and provide longer-lasting hydration. Like many of the Company’s other “natural” products, this product has a high natural origin content based on ISO 16128, and, like the Company’s other natural products, is intended to be certified as a “natural” ingredient. Several prototype formulas have been created and additional testing will be conducted in the coming months. Additional conversations with Ashland are scheduled to better understand the market applications, pricing, and additional testing that may be necessary to prove efficacy.

LUBRAJEL 24: The purpose of this project is to develop a “natural” product with 24-hour hydration. While the Company’s current water-based moisturizing products provide excellent hydration, the goal is to build upon that to produce a product with superior hydration that will last a full 24 hours. Three prototypes have been developed, and hydration testing has been conducted on two of the three, evaluating them against a well-known benchmark, hyaluronic acid. Testing of the remaining prototype will be conducted this winter to determine which formulations will move forward and what the next steps will be in the development process.

UNITED-GUARDIAN, INC.

LUBRAJEL OIL NATURAL: This product was developed to be an addition to the Company’s “natural” line of products. It uses vegetable feedstock and is based on polysaccharide chemistry. Modifications have been made over the past year to increase hydration and stabilize the emulsion. Like the Company’s other “natural” products, this product has been certified by Ecocert to comply with the COSMOS standards for use in natural and organic cosmetic products. The Company has initially launched this product with its marketing partner in the United Kingdom (“UK”) due to a specific interest they had in this product. The product has already been qualified for use by some customers in the UK, and the first commercial order was placed in January 2021. The Company is working with its Italian marketing partner to pursue additional markets where this product might be successful.

LUBRAJEL TERRA: This product was developed as an additional offering to the Company’s line of “natural” products. Lubrajel Terra incorporates plant polysaccharides with natural moisturizers to achieve long-lasting hydration. Like the Company’s other “natural” products, this product has been certified by Ecocert to comply with the COSMOS standards for use in natural cosmetic products. The Company launched this product with its UK marketing partner in August 2021, and has seen interest in this product for use in haircare formulations following the beard-care formulation that was promoted as part of its launch. The Company’s UK marketing partner has informed the Company that several customers have included Lubrajel Terra in their pipeline evaluations. The Company is also working with its Italian marketing partner to pursue additional markets where this product might be successful.

HAIR CARE: A new area of research for the Company will be in haircare ingredients. While the Company has typically spent more of its time developing products for the skincare market, it is putting more effort now into the development of haircare products. The Company will be working with its UK marketing partner to gain insight into this market, focusing on developing “natural” hair care ingredients. Since the Company’s current “natural” line has some overlap with the haircare market it is confident that with additional insight from its marketing partners it will be able to create products for customers that want to elevate their haircare formulations with natural ingredients. The Company intends to continue to work with its marketing partners during all of the stages of product development to ensure that our ingredients are meeting customer needs.

LUBRAJEL DV PF and LUBRAJEL MS PF: The Company developed two additional products for its growing line of preservative-free products. The preservative-free offerings enable formulators to use their own preservative systems without having to account for preservatives already incorporated into the products. Both products will be launched with its UK marketing partners in the second quarter of 2022.

It should be emphasized that some of the projects listed above are in the very early stages of research and development, and there can be no guarantee that any particular development project will result in a marketable product or in significant sales if it is marketed.   

The Company’s research and development expenses in 2021 were $478,642 compared with $451,208 in 2020. The Company expects its research and development expenses in 2022 to be comparable to those of 2021. Any additional increase in development and/or production costs will depend on whether capital investments are required in order to continue development work on, or to manufacture, any of the new products under development.

The Company requires all employees and consultants who may receive confidential and proprietary information to agree in writing to keep such information confidential.

UNITED-GUARDIAN, INC.

TRADEMARKS AND PATENTSSEXUAL WELLNESS INGREDIENTS

The Company strongly believes in protecting its intellectual property. In the past, the Company filed for patent protection in connection with manySexual wellness ingredients is a line of its productshydrogel formulations designed to offer sensory enhancement, lubrication, and processes, and over the years was issued at least 32 patents, all of which are now expired. However, under current patent law the filing of a patent now provides detailed proprietary information that can be used by companies in other countries where enforcement would be difficult and expensive, such as in China. As a result, the Company decided in recent yearsmoisturization to generally forego patent protection and rely instead on trade secret protection to protect its intellectual property, including its proprietary product formulations and manufacturing methods. The Company will continue to consider filing patent applications in situations where it believes that relying on trade secrets would not provide sufficient protection.sexual wellness applications.

The various trademarksnew Natrajel™ line of products comprises Natrajel NT, Natrajel MA, Natrajel ON and trade names owned or usedNatrajel TE. This line was designed using green technology and contains natural raw materials. All the products are RSPO certified, Vegan, biodegradable and COSMOS approved.

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.

Because all shipments to our largest distributor, ASI, are delivered to ASI’s warehouses in the U.S., all sales to ASI are considered domestic sales, even though a significant percentage of ASI’s sales of our products are to customers in foreign countries. Based on sales information provided by the CompanyASI, 69% of ASI’s sales of our products in its business2023 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.

Since sales of our products are of varying importancein U.S. Dollars, our selling prices are generally not affected by fluctuations in foreign currency exchange rates, except to the Company. The most significant trademarks are Lubrajel®, Renacidin®,extent that a stronger dollar compared with foreign currencies can make our products less competitive in foreign markets, sometimes requiring adjustments to our prices in order to be more competitive. We continue to work closely with our network of distributors to price our products as competitively as possible and, Clorpactin®.when appropriate, to offer additional volume discounts and more aggressive pricing to maintain and increase sales and expand our customer base.

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.

COSMETIC INGREDIENTS:

In the United States, the Company'sour cosmetic ingredient products arehave 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. That agreement was for the marketing of the Company’s cosmetic ingredients in North America, Central America, South America, Asia Pacific, and South America. Since that time, this initial agreement has been modified and expanded multiple times (see “Marketing Agreements” below), most recently in 2019 when Korea was added to ASI’s marketing territory.EMEA. ASI also has the exclusive right to market globally four of the Company’s products: products globally: Lubrajel Marine,, which was the second product in the Company’s Lubrajel Natural line of products; Lubrajel BA,, an oral care product which was specifically developed for ASI in 2012 but which, to date, has not had significant sales; and two of the Company’s preservative-free products, Lubrajel Oil PF and Lubrajel II XD PF. ASI also has a non-exclusive right to sell certain of the Company's other industrial and medical products.PF. The current agreement with ASI automatically renewedterminated on January 1, 2022December 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. At this time the Company and ASI have not finalized a new agreement, but we believe that a new agreement will automatically renew again on January 1,be executed by the end of the second quarter of 2024, unless either party chooses to terminate, whichalthough there can be done by giving 60 days’ notice priorno assurance that a new agreement will be executed. The Company anticipates that during the time that contract negotiations are taking place, ASI will continue to market and distribute the then expiration date.Company’s cosmetic ingredients in a manner consistent with past practice.

Revenue from domestic sales of all Company products accounted for approximately 80% of the Company’s total sales in both 2021 and 2020. Domestic sales of cosmetic ingredients accounted for approximately 41%31% of total Company sales in 2021,2023, compared with 30%32% in 2020.2022. Sales to the Company’sour largest marketing partner,distributor, ASI, accounted for approximately 40%30% of total Company sales in 20212023 and 29%32% of sales in 2020. It should be noted, however, that while all sales to ASI are considered domestic sales because all shipments to ASI are delivered to ASI in the U.S., a significant percentage of ASI’s purchases from the Company are ultimately sold to foreign customers. Based on sales information provided to the Company by ASI, 74% of ASI’s sales in 2021 were to customers in foreign countries, compared with 68% in 2020.2022.

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PHARMACEUTICALS:

The Company’sOur 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 34%45% of Company sales in 2021,2023, compared with approximately 41%39% in 2020.2022.

During 20212023 and 2020, the Company2022, we participated in various government drug rebate programs related to the sale of Renacidin®, itsRenacidin, our most important pharmaceutical product. These programs include the Veterans Affairs Federal Supply Schedule (FSS)(“FSS”), and the Medicare Part D Coverage Gap Discount Program (CGDP)(“CGDP”). These programs require the Companyus to sell itsour product at a discounted price. In addition, during 2020, the Company participatedprice, typically given in the Medicaid Drug Rebate Program (MDRP), which required the Company to payform of a significant rebate to the various states where Renacidin was provided to Medicaid patients, as well as the Section 340B Drug Pricing Program (340B), which required the Company to sell their product at a deeply discounted price. Due to the overly burdensome nature of these Medicaid rebates on the Company, and the deeply discounted pricing associated with the 340B Program, the Company terminated its participation in the MDRP and the 340B Programs, effective December 31, 2020. The Company will, however, continue to participate in the other government discount and rebate programs, specifically the Veterans Affairs FSS Program and the Medicare Part D Coverage Gap Program (CGDP).

UNITED-GUARDIAN, INC.

The Company’srebate. 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 PRODUCTSLUBRICANTS:

The Company’s non-pharmaceuticalWe sell our medical products, such as its catheter lubricants and oral care products, are sold by the Company directly to the end users or to contract manufacturers utilized by the end users. These products are also available for sale on a non-exclusive basis through its marketing partners if they choose to market those products. Domestic sales of the Company’s medical productslubricants accounted for approximately 4%3% of the Company’sour total sales in 2021, compared with 8% in 2020.both 2023 and 2022. Although all shipments of medical productslubricants 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 globallyglobally.

.ISO 9001:2015 CERTIFICATION

INDUSTRIAL PRODUCTS: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.

Domestic sales ofOur current ISO 9001:2015 certification is valid through July 22, 2024. We have been in continuous compliance with ISO standards since November 1998. Between November 1998 and December 2003, we were registered under the Company’s specialty industrial products accounted for less than 2% of Company sales in both 2021 and 2020. These products are sold directlyISO 9002 standard. From December 2003 to end-user customers or their contract manufacturers, who incorporate these products into their finished products.December 2009, we were registered under the ISO 9001:2000 standard. From December 2009 to July 2018, we were registered under the ISO 9001:2008 standard.

FOREIGN 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. 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.

SALESINTELLECTUAL PROPERTY

In both 2021recent years, we have elected to rely on trade secret protection to protect our intellectual property for proprietary product formulations and 2020, approximately 20% of the Company’s sales revenue was from foreign sources, and was derived from (a) sales of its cosmetic ingredients to the Company’s foreign marketing partners, which accountedmanufacturing methods. We will file for approximately 9% of Company salespatent protection in 2021 and 2020 and (b) sales of some of the Company’s medical products directly to certain customers in foreign countries, which accounted for approximately 11% of Company sales in both 2021 and 2020.situations where we believe that relying on trade secret protection alone would not provide sufficient protection.

Because all shipments toWe own the Company’s largest marketing partner, ASI, are delivered to ASI’s warehouses in the U.S.Lubrajel®, all sales to ASI are included in “Domestic Sales”Renacidin®, even though a significant percentage of ASI’s sales of the Company’s products are to customers in foreign countries. Based on sales information provided to the Company by ASI, 74% of ASI’s sales of the Company’s products in 2021 were to customers in foreign countries, compared with 68% in 2020. ASI’s largest foreign market in both 2021 Clorpactin®, Excellence Through Innovation®,and 2020 was China, which accounted for approximately 41% of ASI’s sales of Company products in 2021 and 34% in 2020.

Since the Company sells its products in U.S. Dollars, the Company’s selling prices are generally not affected by fluctuations in foreign currency exchange rates, except to the extent that a stronger dollar compared with foreign currencies can make the Company’s products less competitive in foreign markets, sometimes requiring the Company to adjust its prices in order to be more competitive. As a result of the weakened dollar in the second half of 2020 and the first half of 2021 , the Company’s products became more competitive in Europe, but in the second half of 2021 the dollar strengthened against the Euro, which again made the Company’s products less competitive. Current indications are that it is likely that the dollar will continue its current strength against the Euro for most if not all of 2022.

UNITED-GUARDIAN, INC.

SALES AND MARKETING

The Company markets its products through marketing partners and distributors, promotion on the Company’s websites, and by internet advertising, and has some direct sales to customers as well. The cosmetic ingredients are sold outright (not on consignment) to the Company’s marketing partners, which in turn market and resell the products to cosmetic and other personal care product manufacturers for use in the formulation of one or more of their products. The pharmaceutical products are sold in the United States primarily to drug wholesalers, which in turn distribute and resell those products to drug stores, hospitals, physicians, long-term care facilities, the U.S. Department of Veterans Affairs, and other government agencies. The medical and specialty industrial products are sold by the Company directly to the end users of those products. The industrial products are older products that have limited marketability but are still being sold to some long-time customers. They are not actively marketed but are available for sale to any new customers.

MARKETING AGREEMENTS

The Company has a written marketing agreement only with ASI. All other marketing arrangements are subject to cancellation at any time by either the Company or the marketing partner. The marketing agreement with ASI gives it exclusive foreign marketing rights with the exception of the following territories, where the Company's other marketing partners have exclusive marketing rights: the United Kingdom (by The Azelis Group); France (by Sederma SAS, a subsidiary of Croda International Plc.); Italy (by Safic-Alcan); and Switzerland (by Azelis Cosmetics GmbH.).

That agreement set forth provisions under which ASI would market and distribute the Company's cosmetic ingredients, as well as some medical and specialty industrial products, in certain parts of Europe, Asia, Australia, and Africa. In 1996, the parties entered into another agreement, which extended ASI’s distribution rights to the United States, Canada, Mexico, and Central and South America, and in December 2019 the marketing rights in Korea were transferred to ASI from the Company’s previous distributor for Korea. In July 2000, December 2002, December 2005, May 2010, November 2012, and November 2013 the parties entered into additional agreements that modified, extended, and consolidated the 1994 and 1996 agreements, and provided for automatic two-year renewals of ASI’s marketing rights unless either party terminated the arrangement upon 60 days’ notice. The agreement automatically renewed on January 1, 2012, 2014, 2016, 2018, 2020, and 2022 for additional two-year terms. The current contract ends on December 31, 2023.

The Company believes that in the event ASI were to cease marketing the Company's products alternative arrangements could be made with one of the other global marketers of cosmetic ingredients to continue to supply products to customers currently using the Company's products, without any significant interruption of sales.

RAW MATERIALS

The principal raw materials used by the Company consist of common industrial organic and inorganic chemicals. Most of these materials are available in ample supply from numerous sources. The Company has six major raw material vendors that together accounted for approximately 94% of the raw material purchases by the Company in 2021 and 88% in 2020.

Natrajel™ trademarks.

UNITED-GUARDIAN, INC.

RAW MATERIALS

We purchase raw materials from multiple sources in the United States and believe that raw material supplies will be available in quantities sufficient to meet demand in 2024. Although some of those raw materials may be manufactured overseas, all of our suppliers are located within the United States. The Company is continuing to monitor the situation in the Middle East and is working closely with its suppliers in order to manage lead times, if necessary, of its raw materials due to supply chain instability.

The principal raw materials we use consist of common industrial organic and inorganic chemicals. We have three major raw material vendors that together accounted for approximately 83% of our raw material purchases in 2023 and 80% in 2022.

INVENTORIES, RETURNS, andAND ALLOWANCES

ItWe believe it is important for the Company to maintain moderate inventory levels of certain of itsour 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 the Company'sour business.

BACKLOG

The CompanyWe do not currently does not have any significant backlog of orders.

SEASONALITY

Due to the nature of the Company'sour business and the types of products it markets, it isthat we market, we are not subject to any significant seasonal fluctuations in sales.

CUSTOMERS

The Company’sOur cosmetic ingredients are currently marketed and sold globally by five marketing partners.distributors. Those marketing partnersdistributors, in turn, market and distribute those products to their customers. Although the Company dependswe depend on those marketing partnersthese distributors for the marketing and distribution of itsour cosmetic ingredients, it is confidentwe believe that if any of its marketing partnersour distributors were to decide not to sell the Company’sour products, or if the Companywe chose to replace one or more of those marketing partners, itdistributors, we would be able to put in place new marketing agreements in place to service itsour customers in all the geographic areas affected. If necessary, the Companywe would also be able to sell directly to the end users of itsour products until such time as a new marketing partnerdistributor is put in place.

The Company’sOur pharmaceutical products are sold to, and distributed by, full-line drug wholesalers throughout the United States. ItsOur medical and specialty industrial products are sold directly by the Companyus to the end users of those products or, in some cases, to contract manufacturers used by some of those end users.

COMPETITIONRESEARCH AND DEVELOPMENT

Our research and development (“R&D”) team’s main focus is to develop new products and product-line extensions. The Company has someproduct development activities are focused on developing products or processesfor 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. 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 are either proprietary or have some unique characteristics. Its Lubrajel line of products is well known globallyexceed customer expectations.

Our research and has a long-standing reputation for high quality. The Company believes that these characteristics will be advantageous to the Companydevelopment expenses in its continuing efforts to compete effectively2023 were $463,992 compared with other companies marketing similar products. The pharmaceutical, health care,$490,770 in 2022. We expect our research and cosmetic industries are all highly competitive, and during 2021 the Company experienced a high level of competition for its cosmetic ingredients bothdevelopment expenses in the U.S. and in foreign markets. In 2021 the value of the U.S. dollar gradually strengthened relative to some other foreign currencies, in particular the Euro, which made the Company’s products a little less competitive in those markets than it had been when the dollar was not as strong. Regardless of the changes in the currency situation, the Company believes that there will continue2024 to be significant competition for its products, especially from Asian competitors, and it may sometimes be necessary for the Company to lower its prices, and reduce its profit margins,higher than those in 2023 in order to remain competitive. The Company intendssupport 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 work closely with its marketing partners to remain as competitive as possible.

The Company is aware that there are other domestic and foreign companies that are engaged in the same or similar areas of research as those in which the Company is engaged, some of which have substantially greater financial, research, manpower, marketing and distribution resources than the Company. In addition, there are many large, integrated and established companies that have greater capacity than the Company to develop and to commercialize the types of products upon which the Company's research and development programs are based. The Company intends to continue to focus its research efforts on the development of new and innovative products for which there is not the same level of competition as there is for somemanufacture, any of the Company’s older products. The Company is optimistic that its development of uniquenew products including products made exclusively with natural ingredients, will enable it to continue to compete in a market in which competition has become more of a factor than it had been in the past.under development.

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ISO 9001:2015 REGISTRATION

On July 23, 2018, the Company was certified by Underwriters Laboratories, Inc.We require all employees and consultants who may receive confidential and proprietary information to beagree in compliance with the latest ISO standard, ISO 9001:2015, indicating that the Company's documented procedures and overall operations had attained the high level of quality neededwriting to comply with this current ISO certification level. From October 2009 to July 2018, the Company had been registered under the ISO 9001:2008 standard; from December 2003 to October 2009, the Company had been registered under the ISO 9001:2000 standard; and between November 1998 and December 2003 the Company had been registered under the ISO 9002 standard. The Company’s current ISO 9001:2015 certification is valid through July 22, 2024. The Company has been in continuous compliance with ISO standards since November 1998.keep such information confidential.

GOVERNMENT REGULATION

Regulation by governmental authorities in the United States and other countries is a significant factor in the manufacturing and marketing of many of the Company'sour products. The Company and manySome of the Company's products are subject to certain government regulations. Some products developedwe develop and sold by the Companysell in the United States may require approval from federal regulatory agencies, such as the U.S. Food & Drug Administration (“FDA”), as well as state regulatory agencies. Some products developed and sold by the Company outside the United States may require approval from foreign regulatory agencies. Although the Company does not currently market any medical devices, if it were

Our operations and many of our products are subject to do so a 510(k) pre-market notification to the FDA would be required to demonstrate that the device is at least as safechemical control laws. These laws include regulation of chemical substances and effective as a legally marketed device. The Company would then need to receive clearance from the FDA prior to marketing the device. While the Company does not have any plans to develop new pharmaceutical products, if it decided to do so any new drug product would require clinical evaluationinventories under an Investigational New Drug Application, and the subsequent submissionRegistration, Evaluation and Authorization of Chemicals (“REACH”) regulation in Europe, Right to Know laws under the Global Harmonized System (“GHS”) for hazard communication, and the regulation of chemicals used in the manufacture of pharmaceuticals and personal care products and contact food under the Food, Drug and Cosmetics Act in the United States. We are an FDA of a New Drug Application.Establishment registered site.

The Company isWe are required to comply with all pertinent current Good Manufacturing Practices of the FDA for medical devices and drugs.drugs our products may be subject to. Accordingly, the regulations to which the Companywe and certain of itsour products may be subject, and any changes with respect thereto, may materially affect the Company'sour ability to produce and market new products developed by the Company.products.

The Company'sOur present and future activities are, and will likely continue to be, subject to varying degrees of additional regulation under the Occupational Safety and Health Act, Environmental Protection Act, import, export and customs regulations, and other present and possible future foreign, federal, state and local regulations.

Portions of the Company'sour operating expenses are directly attributable to complying with federal, state, and local environmental statutes and regulations. In 20212023 and 2020, the Company2022, we incurred approximately $32,000$41,000 and $13,000$39,000, respectively, in federal, state, and local environmental law compliance expenses. There was no material financial or other impact on the Companyour results of operations as a result of compliance with environmental laws.

ENVIRONMENTAL, SOCIAL, and CORPORATE GOVERNANCEEMPLOYEES HEALTH AND SAFETY

AsWe 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. 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 manufacturer with global sales, the Company isproactive mindset for sustainability. We are committed to sustainable growth and lowering itsminimizing our impact on the local community. It iscommunity and the environment. We are committed to measuring and monitoring itsour impact on the environment and, continually improving. The Company complieswhere appropriate, making improvements. We comply in all material respects with all federal/state/federal, state and local environmental regulations, and hasregulations.

We have recently initiatedestablished a carbon footprint monitoring program. Our plan is to review our current program to ensure it covers all pertinent environmental monitoring and will be settingestablish goals to lower its impact on the environment during the coming years. The Company hasin 2024. We have also joined initiatives for core raw materials, such as RSPO,the Roundtable on Sustainable Palm Oil (“RSPO”), to ensure that it supportswe support suppliers in protecting the environment and the people in it. It isWe are committed to using green chemistry principles to produce biodegradable, natural, and safe products with renewable feedstocks.

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AsSOLID 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.

WATER

We comply in all material respects with all laws and regulations on water discharge.

ECOVADIS

We joined EcoVadis as part of the Company’sour commitment to corporate social responsibilityCorporate Social Responsibility (“CSR"CSR”) it joined. EcoVadis is a global leader in guiding, measuring, and improving corporate environmental and social responsibility and sustainability performance. The EcoVadis assessment measured 21 key issues centered aroundon the environment, labor & human rights, ethics, and sustainable procurement. In its latest evaluation the Companywe scored in the top 15% of companies evaluated.

As part of the assessment, it was determined that the Company waswe were strong in the following four areas:

a) Disciplinary sanctions to deal with policy violations

UNITED-GUARDIAN, INC.

Areas that required continual improvements were reviewed, and programs and policies were implemented as follows:

UNITED-GUARDIAN, INC.

HEALTH & SAFETYHUMAN CAPITAL MANAGEMENT

The Company values itsWe currently have 25 employees, partners, and the planet, and is committed to protecting the safety, health, and security of its employees and that of the environments in which it operates. It is firm in its policy that it will not compromise employee health and safety or the environment for profit or production. It is passionate about health and safety and prides itself on its strategy of prevention through proactive risk elimination and reduction. The coronavirus pandemic introduced a number of unprecedented challenges, but the Company implemented policies and protocols as needed to help prevent the spread of the disease in its facilities, while continuing to operate as an essential business to serve its customers. Such policies and protocols included physical distancing, mandating face coverings, restricting visitation, and educating employees about the disease, its prevention, and vaccines.

EMPLOYEES

The Company presently has 24 employees, 43 of whom serve in an executive capacity, 1618 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, 2223 are full time.employed full-time.

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.

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.

TALENT MANAGEMENT

The talent management process includes a well-established performance assessment process that seeks to provide employees with ongoing feedback to enhance their performance in support of business objectives.

Item 1A. Risk Factors.

The information to be reported under this item is not required of smaller reporting companies.

Item 1B. Unresolved Staff Comments.

The information to be reported under this item is not required of smaller reporting companies.None.

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Item1C. Cybersecurity.Item 2. Properties.

The Company maintains itsWe continue to augment the capabilities of our people, processes, and technologies in order to address our cybersecurity risks. Our cybersecurity risks, and the controls designed to mitigate those risks, are integrated into our overall risk management governance and are reviewed yearly by our Board of Directors.

Risk Management and Strategy

We have implemented a set of comprehensive cybersecurity and data protection policies and procedures. Risks from cybersecurity threats are regularly evaluated as a part of our broader risk management activities and as a fundamental component of our internal control system. Our employees receive annual cybersecurity awareness training, including specific topics related to social engineering and email frauds. We utilize an outsourced information technology firm and consultants with significant expertise in cybersecurity. We invest in advanced technologies for continuous cybersecurity monitoring across our information technology environment which are designed to prevent, detect, and minimize cybersecurity attacks, as well as alert management of such attacks.

Our Information Technology General Controls are firmly established based on the National Institute of Standards and Technology (“NIST”) cybersecurity framework and cover areas such as risk management, data backup, and disaster recovery. We have utilized an outsourced information technology consultant to reduce and monitor security threats and vulnerabilities.  As part of our gap analysis, identified vulnerabilities have been, and will continue to be, promptly addressed with our senior business leadership and our Board of Directors. 

Governance

Our Board of Directors is responsible for overseeing our cybersecurity risk management and strategy. Our President regularly meets with and provides periodic briefings to our Board of Directors regarding our cybersecurity risks and activities, including any recent cybersecurity incidents and related responses, cybersecurity systems testing, activities of third parties, and the like. 

Item 2. Properties

We own our principal office, manufacturing, and factory,research and conducts its research, atdevelopment facility consisting of a 50,000 square foot facility on a 2.7-acre parcel located at 230 Marcus Boulevard, Hauppauge, New York 11788, which the Company owns.11788. 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. The Company hasWe have fully developed the 2.7 acres, and fully utilizesutilize the building occupying the land. The Company believesWe believe that the aforementioned property is adequate for itsour immediately foreseeable needs. The property is presently unencumbered and in the Company’s opinion, is adequately insured.

Item 3. Legal Proceedings.Proceedings

None.From time to time, we are subject to ordinary routine litigation and claims incidental to our business. We are not currently involved in any legal proceedings that we believe are material.

Item 4. Mine Safety Disclosures

Not applicable.

UNITED-GUARDIAN, INC.

Item 4. Mine Safety Disclosures.

Not applicable.

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

Market Information

TheOur Common Stock of the Company hasis currently traded on the NASDAQ Global Market, since March 16, 2009, under the symbol "UG" (“Common Stock”). From December 1, 2008 through March 13, 2009, following the merger of the American Stock Exchange with the New York Stock Exchange, the Company's Common Stock was traded on the NYSE Amex Stock Exchange under the same symbol. Prior to December 1, 2008, its Common Stock traded on the American Stock Exchange under the same symbol.“UG”

Holders of Record

As of March 1, 2022,2024, there were 385355 holders of record of Common Stock.

Cash Dividends

On May 18, 2021,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. 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. 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 May 10, 2022, our Board of Directors declared a semi-annual cash dividend of $0.48$0.37 per share, which was paid on June 7, 20211, 2022 to all stockholders of record as of May 31, 2021.23, 2022. On November 16, 2021, the Company’s15, 2022, our Board of Directors declared a semi-annual cash dividend of $0.65$0.31 per share, which was paid on December 7, 20212022 to all stockholders of record as of November 29, 2021.

On May 20, 2020, the Company’s Board of Directors declared a semi-annual cash dividend of $0.42 per share, which was paid on June 17, 2020 to all stockholders of record as of June 3, 2020. On November 18, 2020, the Company’s Board of Directors declared a semi-annual cash dividend of $0.36 per share which was paid on December 8, 2020 to all stockholders of record as of December 1, 2020.28, 2022.

Item 6. [RESERVED]

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.Operations

Impact of the Coronavirus PandemicGlobal Supply Chain Instability and Inflation

WhileThe increased raw material prices that the coronavirus pandemic (“pandemic”)Company experienced during 2022 and the beginning of 2023 stabilized during the latter part of 2023 as inflation started to decline. 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. 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 certain areas of the Company’s operations, the substantial impact the pandemic had on Company sales in 2020 significantly lessened in 2021. While the Company believesus at any time. If that sales of its cosmetic ingredients are still being negatively impacted, the sales situation has improved substantially,occurs, we may experience longer lead times and the current impact is coming more from increased shipping costs and higherfor some of our raw material costs,materials, which may have someimpact our future impact on the Company’s profit margins in upcoming quarters. It has also experienced delays in shipping orders due to a shortage of truck drivers and trucks, and limited availability of shipping vessels. The shortage of truck drivers and shipping vessels is expected to continue in 2022 but improve as the year progresses. The Company has been able to minimize the impact on customers by making them aware of longer lead times that may be necessary asgross margins. As a result of these issues.

UNITED-GUARDIAN, INC.

Sales of the Company’s non-pharmaceutical medical products (“medical products”) had also been negatively impacted by the pandemic in 2020, but those impacts have lessened as well in 2021. Sales of the Company’s pharmaceutical products were not impacted by the pandemic in 2020 or in 2021.

The pandemic has not significantly affected the ability of the Company to obtain raw materials, but it has made some of those materials more expensive, which could impact the Company’s gross profit margins in the future. The Company has been able to maintain production throughout the pandemic.

Therethis global supply chain instability, there continues to be uncertainty regarding the futurepotential impact of the pandemic on the Company’sour operations or financial results. While the impact on the Company’s’ sales lessened considerably in 2021, the Company is stillresults and we are unable to provide an accurate estimate or projection as to what the future impact of the pandemic will be on the Company’s future operations or financial results. The Company does not expect the carrying value of its assets or its liquidity to be impaired by the pandemic.

Another result of the pandemic has been a significant increase in inflation during 2021. While it is unknown whether inflation will continue to increase or will begin to decrease during 2022, continued inflation is likely to result in further increases in raw material costs, shipping costs, and internal labor costs, which could impact the Company’s future profit margins.be.

Critical Accounting Policies

The Company’sOur 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 the Companyus to make estimates and assumptions affecting the reported amounts of assets, liabilities, revenues, and expenses and the disclosure of contingent assets and liabilities. The Company uses itsWe use our historical experience and other relevant factors when developing itsour 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 the Company’sour significant accounting policies. The following accounting policies are those that the Company considerswe consider critical to an understanding of the financial statements because their application places the most significant demands on the Company’smanagement’s judgment. The Company’sOur financial results might have been different if other assumptions had been used or other conditions had prevailed.

UNITED-GUARDIAN, INC.

Marketable Securities

The Company’sOur marketable securities include investments in equity and fixed income mutual funds. The Company’sfunds 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. Realized gains or losses on mutual funds are determined on a specific identification basis. The Company evaluates itsWe evaluate our investments periodically for possible other-than-temporary impairment by reviewing factors such as the length of time and extent to which fair value had been below cost basis, the financial condition of the issuer, and the Company’sour ability and intent to hold the investment for a period of time which may be sufficient for anticipated recovery of market value. The Company recordsWe record an impairment charge to the extent that the cost of the available-for-sale securities exceeds the estimated fair value of the securities and the decline in value is determined to be other-than-temporary. During 20212023 and 2020, the Company2022, we did not record an impairment charge regarding itsour investment in marketable securities because management believes, based on itsan evaluation of the circumstances, that theany decline in fair value below the cost of certain of the Company’sour marketable securities is temporary.

UNITED-GUARDIAN, INC.Revenue Recognition

Revenue Recognition

The Company recordsWe 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. The Company’sOur principal source of revenue is product sales.

The Company’sOur 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. Such deductions, primarily related to the sale of the Company’sour pharmaceutical products, include chargebacks from the United States Department of Veterans Affairs (‘(“VA”), rebates in connection with the Company’sour current participation in Medicare programs and its past participation in Medicaid programs, distribution fees, discounts, and outdated product returns. 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. All references to “sales” or “Sales” shall mean “net sales” unless specifically identified as “gross sales.”

During 20212023 and 2020, the Company2022, we participated in various government drug rebate programs related to the sale of Renacidin®, itsRenacidin, our most important pharmaceutical product. These programs include the Veterans Affairs Federal Supply Schedule (FSS)(“FSS”), and the Medicare Part D Coverage Gap Discount Program (CGDP)(“CGDP”). These programs require the Companyus to sell its productour products at a discounted price. In addition, during 2020, the Company also participatedprice, typically in the Medicaid Drug Rebate Program (MDRP), which required the Company to payform of a significant rebate to the various states where Renacidin was provided to Medicaid patients, as well as the Section 340B Drug Pricing Program (340B), which required the Company to sell their product at a deeply discounted price. Due to the overly burdensome nature of these Medicaid rebates on the Company, and the deeply discounted pricing associated with the 340B Program, the Company terminated its participation in the MDRP and the 340B Programs, effective December 31, 2020. The Company has continued to participate in the other government discount and rebate programs, specifically the Veterans Affairs FSS Program and the Medicare Part D Coverage Gap Program (CGDP). The Company’srebate. 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. 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. 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 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. 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, the Company was notified by CMS that it qualified as a specified small manufacturer and will receive the discount phase-in discussed above.

UNITED-GUARDIAN, INC.

As long as a valid purchase order has been received and future collection of the sale amount is reasonably assured, the Company recognizeswe recognize revenue from sales of itsour products when those products are shipped, which is when the Company’sour performance obligation is satisfied. The Company’sOur cosmetic products are shipped “Ex-Works” from the Company’sour facility in Hauppauge, NY, and the risk of loss and responsibility for the shipment passes to the customer upon shipment. Sales of the Company’s non-pharmaceuticalour medical lubricant products are deemed final upon shipment, and there iswe have no obligation on the part of the Company to repurchase or allow the return of these goods unless they are defective. Sales of the Company’sour pharmaceutical products are final upon shipment unless (a) they are found to be defective; (b) the product is damaged in shipping; (c) the product is too close to its expiration date for the customer to sell; or (d) the product is expired but is not more than one year after its expiration date. These return policies are in conformance with standard pharmaceutical industry practice. The Company estimatesWe estimate an allowance for outdated material returns based on previous years’ historical returns of itsour pharmaceutical products.

The Company doesWe 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.

UNITED-GUARDIAN, INC.

Any allowances for returns are taken as a reduction of sales within the same period the revenue is recognized. Such allowances are determined based on historical experience under ASC Topic 606-10-32-8. The Company hasWe have not experienced significant fluctuations between estimated allowances and actual activity.

The timing between recognition of revenue for product sales and the receipt of payment is not significant. During 2020, the Company experienced minor delays in receiving payments from certain customers that were impacted by the pandemic; however, the negative impact of those delayed payments was not significant. The Company’s standard credit terms, which vary depending on the customer, range between 30 and 60 days. The Company uses its judgment on a case-by-case basis to determine its ability to collect outstanding receivables and provides allowances for any receivables for which collection has become doubtful. As of December 31, 2021 and December 31, 2020, the allowance for doubtful accounts receivable was $20,252 and $14,017, 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.

The Company hasWe have distribution agreements with certain distributors of itsour pharmaceutical products that entitle those distributors to distribution and services-related fees. The Company recordsWe record distribution fees, and estimates of distribution fees, as offsets to revenue.

Accounts Receivable AllowanceAccounting 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. 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.

The Company performs ongoing credit evaluations of the Company’sour customers and adjusts credit limits, as determined by a review of current credit information. The CompanyWe continuously monitorsmonitor collection and payments from customers and maintainsmaintain an allowance for doubtful accountscredit losses based upon historical experience, the Company’s anticipation of uncollectible accounts receivable and any specific customer collection issues that have been identified. While the Company’sour credit losses have historically been low and within expectations, the Companywe 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. Therefore, a significant change in the liquidity, financial position, or willingness to pay timely, or at all, of any one of the Company’sour significant customers would have a significant impact on the Company’sour results of operations and cash flows. As mentioned above,When determining the reserve for credit losses, the Company hastakes 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 experienced significant issues withsignificant. Our standard credit terms, which vary depending on the collection ofcustomer, range between 30 and 60 days. The Company provides an allowance for credit losses related to its accounts receivable balancesfor which collection is doubtful in accordance with ASU 2016-13. 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 COVID-19 pandemic.uncertainty of the customers taking the discounts, the discounts are recorded when they are taken.

UNITED-GUARDIAN, INC.

Inventory Valuation Allowance

In conjunction with the Company’sour ongoing analysis of inventory valuation, management constantly monitors projected demand on a product-by-product basis. Based on these projections, management evaluates the levels of write-downs required for inventory on hand and inventory on order from contract manufacturers. Although the Company believeswe believe that it haswe 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. The Company hasWe have performed an evaluation of itsour inventory on hand as of December 31, 2023 and December 31, 2022, and believe the date of this report and believes the reserve isreserves are adequate to cover any slow-moving or obsolete inventory. The Company does not believe the value of its finished products, work in process or raw material inventories have been adversely affected by the coronavirus pandemic.

UNITED-GUARDIAN, INC.

Results of OperationsRESULTS OF OPERATIONS

Year ended December 31, 2021 compared with the year ended December 31, 2020:

Sales

Sales increased 27%decreased by approximately 14%, from $10,986,081$12,698,503 in 20202022 to $13,929,629$10,885,154 in 2021.2023. The increasedecrease in sales was primarily due primarily to increasesa 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. In addition, sales of the Company’s cosmetic products and non-pharmaceutical medical products as global economies began recovering from the coronavirus pandemiclubricants decreased by 29%, primarily due to a decrease in demand in 2023 due to foreign customers’ overstocking during 2021.2022.

The increase in sales was the result of the following specific changes in sales in the different product categories:Cosmetic Ingredients

Sales of the Company'sour cosmetic ingredients increaseddecreased by 61%approximately 20%, from $4,274,586$5,167,909 in 20202022, to $6,872,714$4,132,334 in 2021. The increase was attributable primarily to an increase in sales2023. A significant part of the Company’s Lubrajel line of productsdecrease was due to ASI, the Company’s largest marketing partner, whose purchases increased by 74% in 2021. Aggregate sales to the Company’s four other marketing partners increased by 22% from $992,951 in 2020 to $1,210,046 in 2021. That increase was primarily attributable to Company’s marketing partner in the United Kingdom (“UK”), whose sales increased by 42%, from $445,402 in 2020 to $631,589 in 2021. These increases were offset by a small decrease in sales of the Company’s cosmetic ingredients to four other direct customers of the Company.

The Company believes that the increase in sales of the Company’s cosmetic ingredients to ASI was the result of global pandemic conditions improving. However, until the global crisis passes it is likely that there will continue to be a negative impact on the Company’s sales of its cosmetic ingredients, as well as, to a lesser extent, its non-pharmaceutical medical products.

Although a significant percentage of ASI’s purchases from the Company are sold to foreign customers, all sales to ASI are considered U.S. sales for financial reporting purposes, since all shipments to ASI are shipped to ASI’s warehouses in the U.S. A certain percentage of those products are subsequently shipped by ASI to its foreign customers.ASI. Based on sales information provided to the Company by ASI, 74%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. In addition, sales to our other four distributors decreased by a net of ASI’sapproximately 26%, while sales in 2021 were to four of our small direct cosmetic ingredient customers in foreign countries, compared to 68% in 2020. ASI’s largest foreign market in both 2021 and 2020 was China, which accounted forincreased by approximately 41% of ASI’s sales in 2021 and 34% of sales in 2020.71%.

There continuesWe continue to beexperience global competition from Asian and European competitors sellingcompanies that manufacture and sell products that are competitive with thoseour products. These competitive products are usually sold by the Company and which are marketed at a lower pricesprice than those produced by the Company. The strengthening of the U.S. dollar relativeour products; however, they may not compare favorably to the Euro in the second halflevel of 2021 made the Company’s products a little less competitive than they had been in the first halfperformance and quality of 2021, when the dollar had been weaker relative to the Euro. The Company continues toour products. We work closely with its marketing partnersour network of distributors to price itsour products as competitively as possible and, when appropriate, to offer additional volume discounts and more aggressive pricing in order to maintain and increase sales and bringexpand our customer base. 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 customers. However,products, especially in the Company expectsarea of naturally-derived products. We will also continue providing high-quality products, excellent technical support, and the European marketreliability our customers have come to remain very competitive based on the continuing competitionexpect from lower-cost competitors, and for that reason it is concentrating its R&D efforts on developing new and unique products that these other companies do not have. The Company expects to introduce several such products during 2022.us.

Because there are fees, rebates, and allowances associated with sales of the Company’sour two pharmaceutical products, Renacidin and Clorpactin, discussion of the Company’sour pharmaceutical sales includes references to both gross sales (before fees, rebates and allowances) and net sales (after fees, rebates and allowances). Gross sales of the Company’sour two pharmaceutical products, Renacidin and Clorpactin, together decreased by 4%less than 1%, from $5,959,705$5,929,216 in 20202022 to $5,748,244$5,894,220 in 2021. 2023. Gross sales of Renacidin decreased by 6%approximately 1%, from $5,347,827$5,181,190 in 20202022 to $5,041,460$5,127,069 in 2021, while 2023, and gross sales of Clorpactin increased by 16%3% from $611,878$748,026 in 20202022 to $706,784$767,151 in 2021. 2023.

The primary reason for the decrease in Renacidin sales was primarily 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 terminatingfrom its participationsupplier, this temporary shutdown was done to perform required maintenance and address observations made by the FDA at their facility. According to the supplier, it anticipates filling the Company’s outstanding orders in the Medicaid Drug Rebate Program on December 31, 2020.early March of 2024.

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 grossnet sales was partially offset bydue to a decrease in pharmaceutical related fees,certain pharmaceutical-related rebates and allowances. The decrease in pharmaceutical-related rebates and allowances of $427,733 (30%). The decreases in these fees, rebates and2023 was primarily due to a decrease in allowances were primarily the result of the Company’s termination of its participation in the Medicaid Drug Rebate Program at the end of 2020. Due to the overly burdensome nature of the Medicaid rebates that the Company had to pay under this program, the Company determined that it was no longer profitable for the Company to continue to participate. Accordingly, on October 30, 2020 the Company informed the Centers for Medicare & Medicaid Services (CMS) of its intention to terminate its Medicaid Drug Rebate Agreement and its participation in the Medicaid Program, effective December 31, 2020. As the Company had anticipated, the discontinuation of its participation in this program resulted in the loss of some Renacidin sales, but that loss was more than offset by the elimination of the rebate payments, which resulted in an increase in gross profit from Renacidin sales. Although the Company will no longer be incurring Medicaid-related rebate costs, it will continue to incur costs related to other allowances, including Medicare rebates, distribution fees, chargebacks on VA sales, and outdated material returns.

Sales of the Company’sour medical products increasedlubricants decreased by 6%,approximately 29% in 2023, from $2,052,961$2,470,163 in 20202022 to $2,171,204$1,750,632 in 2021. Despite losing2023. The decrease in sales was driven by decreased demand from one of its major medical product customers in 2020, medical product sales rebounded in 2021 with increases in orders from two of the Company’sour larger medicalcontract manufacturer customers located in China, and India. The Company believes that the increases in those orders were duewho had built up inventory levels during 2022 to improving economic conditions in those countries.accommodate their customers’ delivery concerns.

Sales of the Company'sour industrial products as well as other miscellaneous products, increaseddecreased by 8%, from $139,48256% in 2020 to $150,3872023 compared with 2022. The decrease in 2021. The increasesales was primarily due to an increase inthis product line being discontinued after the second quarter of 2023 due to low sales to two of the Company’s industrial product customers, which are located in areas whose operations had been negatively impacted by the Coronavirus pandemic, resulting in a decrease in their orders in 2020.          volume with minimal growth.

Gross Profit on Sales

Gross profit on sales was 59%50% in 20212023 compared with 56%53% in 2020.2022. The increasedecrease in gross profit was primarily due to two main factors: 1) increasedfactors. The first was a decrease in sales of the Company’s Lubrajel line of productsour cosmetic ingredients in 2021,2023 compared to 2022 which carry a higher profit margin than the Company’sour pharmaceutical products, and 2)in 2023 the significant reductionpercentage of pharmaceutical sales was 45% compared with 39% in sales allowances related2022. 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 pharmaceutical products in 2021 helped to increase the gross profit on those products in 2021 compared with 2020.products.

Operating Expenses

Operating expenses increaseddecreased by approximately 4%, from $2,026,368$2,174,127 in 20202022 to $2,035,970$2,078,564 in 2021.2023. The increasedecrease was mainly attributable to an increasedecreases in consultingemployee bonuses and professional fees. The Company anticipatesdepreciation expenses. In connection with the Company’s 2024 growth initiative, we anticipate that operating expenses will remain relatively consistent for 2022.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 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.

UNITED-GUARDIAN, INC.

Research and Development Expenses

Research and development expenses increased from $451,208 in 2020 to $478,642 in 2021. The increase was primarily related to an increase in payroll and payroll related expenses.

Investment Income

Investment income increased by approximately 30%, from $226,245$236,695 in 20202022 to $233,857$306,651 in 2021.2023. The increase was primarily due to an increase in dividendthe Company repositioning its marketable securities portfolio and selling most of its equity and fixed income from both stock and bond mutual funds. In early 2020, the Company beganThe proceeds from these sales were used to shift its investment strategy from lower-yieldingpurchase U.S. Treasury Bills towards short and intermediate-term bond funds thatcertificates of deposit to take advantage of the increase in interest rates in 2023. In addition, in connection with the Company changing its dividend policy during 2023, cash flow increased and the additional monies were yielding higher returns.used to purchase both U.S. Treasury Bills and certificates of deposit.

Net gain (loss) gain on Marketable Securities

TheFor the year ended December 31, 2023, the Company recorded net (loss) gaingains on its marketable securities decreased from aportfolio of $81,095, compared with recording net gainlosses of $298,585$1,046,245 in 2020 to a net loss of $23,018 in 2021.2022. The decreasereason for the fluctuation was primarily due to the Company recognizing higher realized gains on sales offollowing 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 2020, which totaled $415,595, compared to the realized gains on salesinterest 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 20212022, there were some increases in market value at the time of $111,917.these sales, which created unrealized gains in that period.

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. 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.

Provision for Income Taxes

The provision for income taxes increased from $856,022$658,168 in 20202022 to $1,219,383$669,408 in 2021.2023. This increase was due to an increase in income before taxes. The Company’sOur effective income tax rate was 20.7% in 2021 and 20.6% in 2020.2023 and 20.4% in 2022.

Liquidity and Capital Resources

Working capital decreasedincreased from $9,832,326$8,596,939 at December 31, 20202022 to $9,245,629$10,718,457 at December 31, 2021.2023. The current ratio decreasedincreased from 7.3 to 1 at December 31, 2022 to 8.0 to 1 at December 31, 2020 to 5.0 to 1 at December 31, 2021.2023. The decreaseincrease in working capital was mainly due to an increase in dividends paid during 2021, combined with increases in accounts payable, accrued expensescash and deferred revenue.cash equivalents.

Accounts receivable (net of allowance for doubtful accounts)credit losses) as of December 31, 20212023 increased from $1,387,698$1,427,576 in 20202022 to $1,813,346$1,566,839 in 2021.2023. The increase in accounts receivable was due to thean increase in sales during the Company experienced during 2021 due to global economies recovering from the coronavirus pandemic, especially inthird and latter part of the fourth quarter of 2021.2023. The receivables turnover, or “Days Sales Outstanding”,Outstanding,” for 2021,2023, was 4250 days, compared with 5847 days in 2020.2022. The decrease was indicative of the improvement in customers’ ability to more efficiently process payments as economies recovered from the pandemic during 2021. During 2020, the Company experienced minor delays in receiving payments from some customers. The Company’s allowance for doubtfulcredit losses on accounts receivable increaseddecreased from $14,017$20,063 in 20202022 to $20,252$16,672 in 2021,2023, and the Company believeswe believe that the net balance of itsour accounts receivable as of December 31, 20212022 was, and continues to be, fully collectible.

The CompanyWe generated cash from operations of $5,313,277$3,144,480 in 20212023 compared with $3,594,240$2,525,169 in 2020.2022. The increase in 20212023 was primarily due to an increasea decrease in net income in 2021 compared with 2020, combined withinventories and an increase in accounts payable, accrued expenses and deferred revenue.payable.

Net cash used inprovided by investing activities was $468,676$4,727,577 for the year ended December 31, 20202023 compared with $183,475$897,562 for the year ended December 31, 2021. This decrease2022. The increase in net cash used inprovided by investing activities was mainly due to decreased purchasesan increase in the sales of the Company’s marketable securities during 2021.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.

UNITED-GUARDIAN, INC.

Net cash used in financing activities was $5,190,033$459,387 and $3,582,481 during$3,123,492 for the years ended December 31, 20212023 and 2020,2022, respectively. The increasedecrease was due to the payment of higherlower dividends in 20212023 compared with 2020.2022. During 2023, we paid dividends of $0.10 per share compared with $0.68 per share in 2022.

The Company believesWe believe that itsour working capital is sufficient to support itsour operating requirements for the next fiscal year. The Company'sOur long-term liquidity position will be dependent upon itsour ability to generate sufficient cash flow from profitable operations.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.

In connection with an upgrade to our building sprinkler system, costs of approximately $99,000 have been incurred to date. The Company has no material commitments for future capitalproject is expected to be completed during the first half of 2024 with additional planned expenditures and no material cash requirements of immediate concern.$69,000.

The Company hasWe have no off-balance-sheet transactions that have, or are reasonably likely to have, a current or future effect on the Company’sour financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

New Accounting Pronouncements

See Note "A"“A” to the financial statements regarding new accounting pronouncements, which note is incorporated herein by reference.

Item 7A.Quantitative and Qualitative Disclosures about Market Risk.

The information to be reported under this item is not required of smaller reporting companies.

Item 8. Financial Statements and Supplementary Data.

Annexed hereto starting on page F-1.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

None.Previous Independent Registered Public Accounting Firm

On August 29, 2023, as directed and approved by the Audit Committee of our Board of Directors, we formally dismissed Baker Tilly US, LLP (“Baker Tilly”) as our independent registered public accounting firm.

The audit reports of Baker Tilly on the Company’s financial statements for the years ended December 31, 2022 and 2021 did not contain any adverse opinion or disclaimer of opinion, nor were they qualified or modified as to uncertainty, audit scope, or accounting principles.

During the Company’s two most recent fiscal years ended December 31, 2022 and 2021 and the subsequent interim periods through the date of Baker Tilly’s dismissal, there were (i) no disagreements, within the meaning of Item 304(a)(1)(iv) of Regulation S-K and the related instructions thereto, with Baker Tilly on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of Baker Tilly, would have caused Baker Tilly to make reference to the subject matter of the disagreements in connection with its reports on the Company’s financial statements for such years, and (ii) no reportable events as defined in Item 304(a)(1)(v) of Regulation S-K and the related instructions thereto.

New Independent Registered Public Accounting Firm

On August 29, 2023, as directed and approved by the Audit Committee, we formally retained Grassi & Co. CPAs P.C. (“Grassi”) as our independent registered public accounting firm, effective immediately.

UNITED-GUARDIAN, INC.

During the two most recent fiscal years ended December 31, 2022 and 2021 and the subsequent interim periods through the date of Grassi’s appointment, the Company has not consulted with Grassi regarding either the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on the financial statements of the Company, and neither a written report nor oral advice was provided to the Company that Grassi concluded was an important factor considered by the Company in reaching a decision as to any accounting, auditing, or financial reporting issue, or (ii) any matter that was either the subject of a “disagreement” within the meaning of Item 304(a)(1)(iv) of Regulation S-K and the related instructions thereto or a “reportable event” within the meaning of Item 304(a)(1)(v) of Regulation S-K.

Item 9A. Controls and Procedures.

(a)   Evaluation of Disclosure Controls and Procedures

The Company’sOur management, with the participation of the Company’sour Principal Executive Officer and Principal Financial Officer, has evaluated the design, operation, and effectiveness of the Company’s disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act as of December 31, 2021.2023. On the basis of that evaluation, management concluded that the Company’sour disclosure controls and procedures are designed to be, and are, effective at providing reasonable assurance that the information required to be disclosed in reports filed or submitted pursuant to the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the SEC, and that such information is accumulated and communicated to management, including itsour Principal Executive Officer and Principal Financial Officer as appropriate, to allow timely decisions regarding required disclosure.

UNITED-GUARDIAN, INC.

(b)   Management’s Report on Internal Control over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). The Company’sOur internal control system is designed to provide reasonable assurance to management and to the Company’sour Board of Directors regarding the preparation and fair presentation of published financial statements. Under the supervision and with the participation of management, including the Company’sour Principal Executive Officer and Principal Financial Officer, management conducted an evaluation of the effectiveness of the Company’sour internal control over financial reporting based on the framework in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO 2013)(“COSO 2013”). Based on management’s evaluation under the framework in Internal Control—Integrated Framework, management concluded that the Company’sour internal control over financial reporting was effective as of December 31, 2021.2023.

This Annual Report does not include an attestation report of the Company’sour registered public accounting firm regarding internal control over financial reporting. Since the Company iswe are a non-accelerated filer, management’s report is not subject to attestation by the Company'sour registered public accounting firm pursuant to Section 404(b) of the Sarbanes-Oxley Act of 2002. As a result, this Annual Report contains only management’s report on internal controls.

(c)  Changes in Internal Control over Financial Reporting

There were no changes in the Company’sour internal control over financial reporting in the fourth quarter of 20212023 that materially affected, or would be reasonably likely to materially affect, the Company’sour internal control over financial reporting.

(d)Limitations of the Effectiveness of Internal Controls

The effectiveness of the Company’sour system of disclosure controls and procedures and internal control over financial reporting is subject to certain limitations, including the exercise of judgment in designing, implementing and evaluating the control system, the assumptions used in identifying the likelihood of future events, and the inability to eliminate fraud and misconduct completely. As a result, there can be no assurance that the Company’sour disclosure controls and procedures and internal control over financial reporting will detect all errors or fraud. However, the Company’sour control systems have been designed to provide reasonable assurance of achieving their objectives, and the Company’sour Principal Executive Officer and Principal Financial Officer have concluded that the Company’sour disclosure controls and procedures and internal control over financial reporting are effective at the reasonable assurance level.

Item 9B. Other Information.

None.

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Not applicable.

UNITED-GUARDIAN, INC.

Item 9B. Other Information.

None.

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Not applicable.

PART III

Item 10. Directors, Executive Officers and Corporate Governance.Governance.

The information required by this item is incorporated by reference to the section entitled “Directors and Executive Officers” to be contained in the Company’s 2024 Proxy Statement.

EXECUTIVE OFFICERSCODE OF ETHICS

Set forth in the table immediately below are the namesWe have adopted a Code of Business Conduct and ages of each of the executive officers of the Company and their principal occupations for at least the past five years.

DIRECTORS

Six directors are to be elected at the next annual meeting of stockholders of the Company (which has not been scheduled as of the date of this Annual Report on Form 10-K). Directors serve until the next annual meeting of stockholders and until their successors have been elected and qualified. Set forth in the table below are the names of all persons who are currently directors of the Company, the principal occupation or employment of each such person for at least the past five years, his present position(s) with the Company, his qualifications to serve as a director, other board memberships of public companies, and the year he was first elected a director.

UNITED-GUARDIAN, INC.

⁽¹⁾ Member of Audit Committee

⁽²⁾ Member of Compensation Committee

There are no family relationships between any director and/or officer of the Company.

UNITED-GUARDIAN, INC.

BOARD MEETINGS

During the fiscal year ended December 31, 2021, the Board held four regular meetings via Zoom videoconference, as well as several additional meetings. All five directors participated in all of our officers, directors, and employees serving in any capacity, including the regular meetingsChief Executive Officer and/or President, Chief Financial Officer, and Principal Accounting Officer. A copy of our Code of Business Conduct and Ethics is available on our website at www.u-g.com/esg. If applicable, we intend to satisfy the additional directors’ meetings,disclosure requirement under Item 5.05 of Form 8-K relating to amendments to or waivers from any provision of our Code of Business Conduct and the Annual Meeting of Stockholders.Ethics applicable to our website.

AUDIT COMMITTEE

The Company hasWe have an Audit Committee (“Committee”) that is currently composed of three independent members of the Company’s independent directors,our Board of Directors, as well as an additional outside director that has expertise in both accounting and financial reporting, who acts as an advisor to the Committee. The members of the Committee are elected annually by the Board of Directors. The Committee was established for the purpose of assisting the Board of Directors in fulfilling its oversight responsibilities, including (a) overseeing the Company’sour accounting and financial reporting processes, including preparation of financial statements and audits; (b) assuring the Company’s compliance with all applicable legal, regulatory, and ethical responsibilities; (c) evaluating the qualifications and independence of the Company’sour independent accountants;registered public accounting firm; and (d) assessing the effectiveness of the Company’sour internal controls and risk management procedures. The Committee currently meets fiveat least four times a year and is governed by a charter that was adopted in 2006 and updated in 2020.

In addition to assessing the independence of the Audit Committee members under NASDAQ rules, the Board also considered the requirements of Section 10A(m)(3) and Rule 10a-3 under the Exchange Act in regard to having a financial “expert” on the Audit Committee. Due to the significant expense involved in recruiting another Board member for the sole purpose of having a financial “expert” on the Audit Committee, the Board instead determined that S. Ari Papoulias was “financially sophisticated” as that term is defined by NASDAQ, and that Lawrence F. Maietta, a Certified Public Accountant and former member of the Audit Committee, while not considered independent for purposes of membership on the Audit Committee, would be considered a financial “expert” and therefore could act as an advisor to the Audit Committee and provide the necessary financial expertise.

COMPENSATION COMMITTEEItem 11. Executive Compensation.

The Board has a compensation committee which was formed in 1999 for the purpose of recommendinginformation required by this item is incorporated by reference to the Board the compensation of corporate officerssection entitled “Directors and key employees for the ensuing year. Members of the Compensation Committee are Messrs. Lawrence F. Maietta, Arthur M. Dresner, and Andrew A. Boccone. Ken Globus acts as advisorExecutive Officers” to the Committee representing management. The Committee held one meeting via Zoom videoconference in 2021. The Compensation Committee does not have a charter. Neither management nor the Committee has engaged a consultant to provide advice on compensation.

The Compensation Committee does not set compensation of directors. Instead, the full Board acts on recommendations made by the independent directors. In its review of compensation of directors, the Board considers various factors, such as compensation of directors in other public companies of a similar size, the time spent by Board and Committee members in their service to the Company, and recent changes that may result in an increase or decreasebe contained in the responsibilities or time commitment of a Board and Committee member.Company’s 2024 Proxy Statement.

NOMINATING COMMITTEEItem 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

The Board does not have a Nominating Committee. The full Board fulfillsinformation required by this item is incorporated by reference to the role of a nominating committee. Final selections are made by a majority of the independent directors. Ken Globus is not independent as that term is defined by the listing standards of NASDAQ. It is the position of the Board that it is appropriate for the Company notsection entitled “Directors and Executive Officers” to have a separate nominating committee because the size, composition and collective independence of the Board enables it to adequately fulfill the functions of a standing committee. NASDAQ does not require the Company to have a separate nominating committee but does require that Board nominees be selected by either a nominating committee composed solely of independent directors or by a majority of the independent directors. The Board has not considered diversity in identifying nominees for director positions, but intends to do socontained in the future.Company’s 2024 Proxy Statement.

Item 13. Certain Relationships and Related Transactions, and Director Independence.

The information required by this item is incorporated by reference to the section entitled “Directors and Executive Officers” to be contained in the Company’s 2024 Proxy Statement.

UNITED-GUARDIAN, INC.

ROLE OF THE BOARD IN RISK OVERSIGHT

The Board views risk management as a process designed to identify, manage, and control risks that may adversely affect the Company, so that they are appropriate considering the Company's size, operations and business objectives. The Company's risk management policies enable the Company to manage risk within acceptable limits and provide reasonable assurance of optimum corporate performance in the area of risk/return. The Board has ultimate responsibility for oversight of the Company's risk management processes, and discharges this responsibility through regular reports received from, and discussions with, senior management on all areas of material risk exposure to the Company. These reports and discussions include, among other things, operational, financial, legal and regulatory, and strategic risks. The full Board engages with the appropriate members of senior management to enable its members to understand and provide input to, and oversight of, risk identification, risk management and risk mitigation strategies. In addition, the Company's Audit Committee is responsible for evaluating and monitoring financial risks, and meets regularly in executive session without management present to, among other things, discuss the Company's risk management culture and processes. While the Board oversees the Company’s risk management, the Company’s senior management is responsible for day-to-day risk management processes.

STOCKHOLDER COMMUNICATIONS WITH THE BOARD

The Board has adopted the following procedure for stockholders to send communications to the Board other than stockholder proposals for consideration at the annual meeting of stockholders which should be submitted to our Corporate Secretary. Stockholders who wish to send communications to directors should refer to the Company’s website at: www.u-g.com and direct those communications to Mr. Arthur M. Dresner, Chairman of the Audit Committee, whose email address is posted there. All communications sent to Mr. Dresner, but addressed to other Board members, will be forwarded to that Board member by Mr. Dresner.

CODE OF ETHICS

The Company has adopted a Code of Business Conduct and Ethics that applies to all officers, directors, and employees serving in any capacity to the Company, including the Chief Executive Officer and/or President, Chief Financial Officer, and Principal Accounting Officer. A copy of the Company's Code of Business Conduct and Ethics is available on the Company's website at http://www.u-g.com/corporate. The Company intends to satisfy the disclosure requirement under Item 5.05 of Form 8-K relating to amendments to or waivers from any provision of its Code of Business Conduct and Ethics applicable to the Chief Executive Officer, Chief Financial Officer, and Principal Accounting Officer by posting this information on the Company's website.

INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS

None of the Company’s officers, directors, or control persons have been involved in any legal proceedings as described in Item 401(f) of Regulation S-K.

UNITED-GUARDIAN, INC.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act") requires the Company's officers, directors and persons who own more than 10% of a class of the Company's equity securities to file reports of beneficial ownership and changes in beneficial ownership with the SEC. Officers, directors and greater than 10% stockholders are required by SEC regulations to furnish the Company with copies of all Section 16(a) forms they file. Based on (i) a review of copies of Forms 3, 4, and 5 and any amendments thereto furnished to the Company during and with respect to the fiscal year ended December 31, 2021 and (ii) any written representations signed by reporting persons that no Form 5 is required, the Company believes that all persons subject to the reporting requirements pursuant to Section 16(a) filed the required reports on a timely basis during and with respect to the fiscal year ended December 31, 2021.

Item 11. Executive Compensation.

EXECUTIVE COMPENSATION

The following table sets forth for the years ended December 31, 2021 and December 31, 2020 certain information concerning the compensation paid to the Company's executive officers:

2021 DIRECTOR COMPENSATION

The following table sets forth for the fiscal year ended December 31, 2021 certain information concerning the compensation paid to directors of the Company who are not “named executive officers” (as such term is defined in Item 402(m)(2) of Regulation S-K):

UNITED-GUARDIAN, INC.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

The following table sets forth the shares of the Company's Common Stock, par value $.10 per share (the only class of stock issued and outstanding), owned beneficially by each person who, as of March 1, 2022, is known by the Company to have owned beneficially more than 5% of the outstanding Common Stock. Regarding the shares referenced in footnote (1) below, the beneficial owner has both sole voting power and sole investment power, except for those shares held by his spouse as noted.

UNITED-GUARDIAN, INC.

SECURITY OWNERSHIP OF MANAGEMENT

The following information is furnished with respect to ownership of shares of Common Stock as of March 1, 2022, by each named executive officer, each director (which includes all nominees for director) and by all directors and executive officers of the Company as a group (8 persons). Except as otherwise indicated, the beneficial owner has sole voting and investment power.

Item 13. Certain Relationships and Related Transactions, and Director Independence.

RELATED PARTY TRANSACTIONS

The Company has adopted a written policy for the approval of "related party" transactions. Under the policy, related parties are defined to include executive officers and directors of the Company and their immediate family members, a stockholder owning in excess of 5% of the Company, and entities in which any of the foregoing have a substantial ownership interest or control. The policy applies to any transactions that exceed or are expected to exceed $50,000 in a single calendar year.

The policy provides that the Audit Committee will review transactions subject to the policy and decide whether or not to approve or ratify those transactions. In doing so, the Audit Committee will make a determination as to whether the transaction is in the best interests of the Company and its stockholders, taking into account (a) the benefits to the Company and its stockholders; (b) the extent of the related person’s interest in the transaction; (c) whether the transaction is on terms generally available to an unaffiliated third-party under the same or similar circumstances; (d) the impact or potential impact on a director’s independence in the event the related party is a director, an immediate family member of a director, or an entity in which a director is a partner, shareholder or executive officer; and (e) the terms of each transaction. The policy also provides that director and officer compensation that is approved by the Board or the Compensation Committee is exempt from this approval process and will be considered to be pre-approved. The Related Party Transaction Policy can be found on the Company's web site at www.u-g.com.

There were no related party transactions during the fiscal year ended December 31, 2021.

UNITED-GUARDIAN, INC.

Item 14. Principal Accounting Fees and Services.

Change in Registered Public Accounting Firm

On August 29, 2023, as directed and approved by the Audit Committee of our Board of Directors, we formally dismissed Baker Tilly as our independent registered public accounting firm.

On August 29, 2023, as directed and approved by the Audit Committee, we formally retained Grassi as our independent registered public accounting firm, effective immediately.

Audit Fees

The aggregate fees that have been billed by Baker Tilly US, LLP (“Baker Tilly”), the Company’s principal accountants since March 25, 2019, for the quarterly reviews of the Company’s financial statements for the first, second and third quarters of 2020 and the audit of the Company’s financial statements for the 2020 fiscal year were $89,500.

The aggregate fees that have been or are expected to be billed by Grassi & Co., CPAs P.C. (“Grassi”), our principal accountants, for the quarterly review of our financial statements for the third quarter of 2023 and the audit of our financial statements for the 2023 fiscal year were approximately $82,000.

There were no fees billed by Grassi in 2022.

The aggregate fees that were billed by Baker Tilly US, LLP (“Baker Tilly”), our former accountants, for the quarterly reviews of our financial statements for the Company’sfirst and second quarters of 2023 were approximately $23,000.

The aggregate fees that have been billed by Baker Tilly, our former accountants, for the quarterly reviews of our financial statements for the first, second and third quarters of 20212022 and the audit of the Company’sour financial statements for the 20212022 fiscal year are $90,500.were approximately $97,000.

Audit-Related Fees

During 2021,2023, there were no fees paid to Grassi in connection with our compliance with Section 404 of the Sarbanes-Oxley Act of 2002.

No other fees were billed by Grassi for the last two fiscal years that were reasonably related to the performance of the audit or review of our financial statements and not reported under "Audit Fees" above.

During 2022, there were no fees paid to Baker Tilly in connection with the Company'sour compliance with Section 404 of the Sarbanes-Oxley Act of 2002.

No other fees were billed by Baker Tilly for the last two fiscal years that were reasonably related to the performance of the audit or review of the Company'sour financial statements and not reported under "Audit Fees" above.

Tax Fees

There were no fees billed by Baker Tilly or Grassi during the last two fiscal years for professional services rendered for tax compliance, tax advice, or tax planning. Accordingly, none of such services were approved pursuant to pre-approval procedures or permitted waivers thereof.

All Other Fees

There were no other non-audit-related fees billed to the Company by Grassi or Baker Tilly in 20212023 or 2020.

Pre-Approval Policies and Procedures

Engagement of accounting services by the Company is not made pursuant to any pre-approval policies and procedures. Rather, the Company believes that its accounting firm is independent because all of its engagements by the Company are approved by the Company's Audit Committee prior to any such engagement.

The Audit Committee meets periodically to review and approve the scope of the services to be provided to the Company by its Independent Registered Public Accounting Firm, as well as to review and discuss any issues that may arise during an engagement. The Committee is responsible for the prior approval of every engagement of the Company's Independent Registered Public Accounting Firm to perform audit and permissible non-audit services for the Company, such as quarterly financial reviews, tax matters, and consultation on new accounting and disclosure standards.

Before the auditors are engaged to provide those services, the President and the Chief Financial Officer will make a recommendation to the Committee regarding each of the services to be performed, including the fees to be charged for such services. At the request of the Committee, the Independent Registered Public Accounting Firm and/or management shall periodically report to the Committee regarding the extent of services being provided by the Independent Registered Public Accounting Firm, and the fees for the services performed to date.2022.

UNITED-GUARDIAN, INC.

PART IV

Item 15. Exhibits and Financial Statement Schedules.

SIGNATURESItem 16. Form 10-K Summary.

None

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

UNITED-GUARDIAN, INC.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

UNITED-GUARDIAN, INC.

EXHIBIT INDEX

UNITED-GUARDIAN, INC.

** Management contract or compensatory arrangement.

*** XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended and otherwise is not subject to liability under these sections.

UNITED-GUARDIAN, INC.

REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM

To the shareholdersAudit Committee and the board of directorsStockholders of United-Guardian, Inc.:

Opinion on the Financial Statements

We have audited the accompanying balance sheetssheet of United-Guardian, Inc. (the “Company”) as of December 31, 2023, and the related statements of income, stockholders’ equity, and cash flows for the year ended, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023, and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provide a reasonable basis for our opinion.

Critical Audit Matters

Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there were no critical audit matters.

/s/ GRASSI & CO., CPAs, P.C.

We have served as the Company’s auditors since 2023.

Jericho, New York

March 19, 2024

UNITED-GUARDIAN, INC.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the shareholders and the board of directors of United-Guardian, Inc.:

Opinion on the Financial Statements

We have audited the accompanying balance sheet of United-Guardian, Inc. (the "Company") as of December 31, 2021 and 2020,2022, the related statements of income, stockholders' equity, and cash flows, for the yearsyear then ended, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020,2022, and the results of its operations and its cash flows for the yearsyear then ended, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

UNITED-GUARDIAN, INC.

We conducted our auditsaudit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the auditsaudit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our auditsaudit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our auditsaudit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our auditsaudit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provideaudit provides a reasonable basis for our opinion.

Critical Audit Matters

Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there are no critical audit matters.

/s/ Baker Tilly US, LLP

We have served as the Company's auditor since 2019.from 2019 to 2022.

Uniondale, NY

March 16, 20222023

UNITED-GUARDIAN, INC.

STATEMENTS OF INCOME

See Notes to Financial Statements

UNITED-GUARDIAN, INC.

STATEMENTS OF INCOMEBALANCE SHEETS

ASSETS

See Notes to Financial Statements

UNITED-GUARDIAN, INC.

BALANCE SHEETS

LIABILITIES AND STOCKHOLDERS' EQUITYASSETS

See Notes to Financial Statements

UNITED-GUARDIAN, INC.

STATEMENTS OFBALANCE SHEETS

LIABILITIES AND STOCKHOLDERS' EQUITY

Years ended December 31, 2021 and 2020