Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒   No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒  No ☐

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.) Yes ☐ No ☒

As of June 30, 2020,2021, the last business day of the Registrant’s most recently completed second fiscal quarter, the aggregate market value of the voting and non-voting common equity held by non-affiliates, computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, was approximately $48,900,000.$68,960,700 (based on a closing price of $15.01 per share). (For the purpose of this report it has been assumed that all officers and directors of the Registrant, as well as all stockholders holding 10% or more of Registrant's stock, are affiliates of the Registrant).

APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ☐ No ☐

As of March 1, 2021,2022, the Registrant had issued and outstanding 4,594,319 shares of Common Stock, $.10 par value per share ("Common Stock").

DOCUMENTS INCORPORATED BY REFERENCE:

Certain information required by Part III (portions

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.

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

PART I

(a)Introduction

United-Guardian, Inc. ("United", "Registrant", or “Company”) is a Delaware corporation that, through its Guardian Laboratories division, manufacturesconducts research, product development, manufacturing and marketsmarketing of cosmetic ingredients, pharmaceuticals, medical lubricants,products, and proprietary specialty industrial products. It also conducts research and product development, primarily related to the development of new and unique cosmetic ingredients. The Company’s research and development department also modifies, refines, and expands the uses forof existing products withfor additional uses and markets. It also develops new products using natural and environmentally friendly raw materials, which is important to many of the goal of further developing the market for the Company's products.Company’s cosmetic customers.

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

The Company has a broad range of products, somemany of which are currently marketed and some of which are still in the research and development stage. Of the products being actively marketed, the two largest product lines are the Lubrajel^®Lubrajel® line of cosmetic ingredients and medical lubricants, which accounted for 57%60% of the Company's gross sales in 2020,2021, and Renacidin^®Renacidin® Irrigation Solution (“Renacidin"), a pharmaceutical product that accounted for 36%34% of the Company's gross sales in 2020.2021.

UNITED-GUARDIAN, INC.

Unless indicated otherwise, all references in this Annual Report to “sales” or “Sales” shall mean net sales. When changes are shown as percentages, the number is approximate and has been rounded from one decimal place to the nearest whole number.

(b) Description of Business

The Company manufactures and markets cosmetic ingredients, pharmaceuticals, medical lubricants, and specialty industrial products. It also conducts research and development, primarily related to the development of new and unique cosmetic ingredients. The Company focuses on the development of products that fill unmet market needs, have unique properties, and use proprietary technology that it sometimesthe Company typically protects as trade secrets rather than with patents. Many of the Company's products are marketed through collaborative agreements with larger companies.

The cosmetic ingredients manufactured by the Company are marketed to end users through the Company's worldwide network of marketing partners and distributors and are currently used by many of the major manufacturers of cosmetic products. The Company sells products outrightships its cosmetic ingredients to its marketing partners Ex Works (EXW) the Company’s plantfrom its facility in Hauppauge, New York. Those marketing partners 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 productscosmetic 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’s pharmaceutical products are sold primarily to several full-line drug wholesalers which in turn supply those products to pharmacies, physicians, and hospitals. The Company arranges for, and covers the cost of, shipping its 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 operates in one business segment. The Company’s products are separated into four distinct product categories: cosmetic ingredients, pharmaceuticals, medical products, and industrial products. Each product category is marketed differently.  

The Company’s cosmetic ingredients are currently marketed globally by five marketing partners, 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’s cosmetic ingredients are sold directly to those marketing partners, which in turn resell those products to their customers for use in the formulation of one or more of the customers’ personal care and cosmetic products. The Company’s non-pharmaceutical medical products (referred to hereinafter as the Company’s “medical products”) and its specialty industrial products are sold directly by the Company to marketers of finished products or to the contract manufacturers utilized by those marketers. The Company’s marketing efforts for its pharmaceutical products are marketedaccomplished primarily through its dedicated Renacidin website and by internet advertising, andadvertising. The pharmaceutical products are sold to hospitals and pharmacies primarily through full-line drug wholesalers, which purchase the Company’s products outright for resale to their customers. The Company also sells a small quantity of pharmaceutical products directly to hospitals and pharmacies. The Company's products are sold under trademarks or trade names owned by the Company, 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 has a corporate website at www.u-g.com, and a specific website for Renacidin at www.renacidin.com.

UNITED-GUARDIAN, INC.

IMPACT OF THE CORONAVIRUS PANDEMIC

In March 2020, the spread of the coronavirus (COVID-19) began to cause disruptions among businesses and markets worldwide. On March 20, 2020, the Governor of New York issued an executive order which closed non-essential businesses. The Company, as a manufacturer of pharmaceutical and medical products, was considered an essential business, and continued to operate throughout the pandemic. When the spread of the coronavirus was at its worst in New York the Company modified its staffing schedule in order to decrease employee density as much as possible, with employees working 7 days a week on altered hours, and later on an every-other-week work schedule with limited hours. Despite the reduced schedule the Company was able to maintain adequate production and shipping schedules, and was able to fill all orders on a timely basis. As things improved, the Company gradually increased its working hours and employee density until it resumed its regular working schedule in June 2020. Throughout the pandemic the Company was able to maintain its full payroll, all employees received their full pay, and no employees were furloughed or dismissed.

While the Company’s pharmaceutical sales have not been impacted by the coronavirus pandemic sales(“pandemic”) continues 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 medicalthe 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 havedue 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 as the year progresses. The Company has been significantly impacted, particularly inable to minimize the second halfimpact on customers by making them aware of 2020. longer lead times that may be necessary as a result of these issues.

Sales of the Company’s cosmetic ingredientsnon-pharmaceutical medical products (“medical products”) had also been negatively impacted by the pandemic in 2020, decreased by 33% compared with 2019. The decrease was primarily the resultbut those impacts lessened as well in 2021. Sales of lower sales to ASI, the Company’s marketing partnerpharmaceutical products were not impacted by the pandemic in China, and was caused primarily by factors related to2020 or in 2021.

The pandemic has not significantly affected the coronavirus, including (a) lower consumer demand in China for manyability of the products in whichCompany 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 products are used; (b) manufacturing disruptionsgross profit margins in China resulting from the impact of the coronavirusfuture on manufacturing facilities; and (c) excess inventory levels due to overstocking on the part of both the Company’s marketing partner for China as well as its sub-distributors in China.certain products. The overstocking was due to the uncertainty on the part of the marketing partner about beingCompany has been able to continue to get product from the Company duringmaintain production throughout the pandemic.

BecauseAs a result of the Company’s cosmetic ingredients are marketed in many different countries, it is difficult to project the future impactlingering effects of the coronavirus pandemic on the Company’s global cosmetic ingredient sales, since the virusas described above, there continues to impact different countries at different times andbe uncertainty in regard to very different extents. The Company is hopeful that as vaccinations increase, the global economic situation will gradually improve. However, based on the current situation, as well as future projections by different analysts, the Company anticipates that the pandemic will continue to negatively impact sales of the Company’s cosmetic ingredients throughout most or all of 2021.

The Company also believes that the coronavirus impacted sales to two of the Company’s four major medical product customers whose orders decreased in 2020, and may have been a factor in the loss of a third (although the Company has not yet been able to confirm that as the reason for that lost business). Overall sales of the Company’s medical products decreased by 31% compared with the corresponding periods in 2019.

With the continuing uncertainty as to what the duration and futurepotential impact of the pandemic will be,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 continuingfuture impact of the coronaviruspandemic will be on the Company’s future operations or its financial results in the future. However, as of the date of this report, the Company does not anticipate that the coronavirus pandemic will affect the ability of the Company to obtain raw materials and maintain production. The Company has price protection on some but not all of its most important raw materials, has multiple sources for many of its raw materials, and has been able to maintain sufficient inventory and production levels to enable it to fulfill sales orders on a timely basis.results. The Company does not expect the carrying value of its assets or its liquidity to be impaired by the coronavirus pandemic.

PRODUCTS

As stated above, the Company operates in one business segment, and its product lines are separated into four distinct product categories:

COSMETIC INGREDIENTS

LUBRAJEL^®is an extensive line of water-based moisturizing and lubricating gel formulations that are used as ingredients in personal care products (primarily cosmetic/skincare) products.. 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 emolliency to personal care products, particularly creams and lotions. Ecocert, one of the global organizations authorized to certify natural and organic products, has certified that Lubrajel Natural complies with the Cosmetic Organic and Natural Standard (“COSMOS”), indicating that the product is suitable for use in natural and organic cosmetic products.

UNITED-GUARDIAN, INC.

LUBRAJEL MARINE™MARINE™ was the second product 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 original 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.

Total sales of the Company's cosmetic ingredients decreasedincreased by $2,102,737 (33%$2,598,128 (61%) for the year ended December 31, 20202021 when compared with 2019,2020, and accounted for approximately 39%49% of total Company sales in 20202021 compared with 47%39% in 2019.2020. The decreaseincrease was due primarily to a decreasean increase in sales of Lubrajel cosmetic ingredients to ASI, for distribution in China, which the Company believes was due mainly to issues relateddue to the global economies gradually recovering from the impact of the coronavirus pandemic.pandemic during 2021.

Each of the following cosmetic ingredients accounted for less than 2% of the Company’s sales in 2020,2021, listed in descending order of sales.

LUBRAJEL II XD is a version of Lubrajel that was developed to be a direct replacement for one of the competitive products to Lubrajel. There is a paraben-free version of this product known as Lubrajel II XD Free, and the Company is currently developingrecently completed the development of a preservative-free version of this product, which is being marketed as LUBRAJEL II XD PF.

LUBRASIL™ II SB is a special formulation of Lubrajel in which silicone oil is incorporated into a Lubrajel base using proprietary technology that enables the product.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 in the manufacture of certain cosmetics, such as pressed powders, eyeliners, 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. Until 2021 the Company also had small sales of another powdered lubricant, Lubraslide, but that product has now been discontinued due to the negative environmental impact of the PTFE that was one of its ingredients.

KLENSOFT™ 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 sales havehad been highly variablediscontinued in 2021 due to the ordering patterns of the primary customers for the product.

LUBRASIL™ II SB is a special formulation of Lubrajelsignificant increase in raw material costs which silicone oil is incorporated into a Lubrajel base using proprietary technology that enablesmade the product difficult to maintain muchmarket. 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 clarity of regular Lubrajel. The product has a silky feel and is water resistant while at the same time providing moisturization.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, 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 impacted the sales of the Company’s cosmetic ingredients over the past few years. In particular, the Company has experienced significant pricing pressure from competitive products being marketed by some Asian manufacturers. These lower-cost competitive products are likely to continue to negatively impact the Company’s sales and profit margins on some of its products in certain geographic areas.

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.

MEDICAL LUBRICANTS

LUBRAJEL RR andRC are both water-based gels used primarily as lubricants for urinary catheters. They are special grades of Lubrajel that 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 developed as a lower-cost alternative to Lubrajel RR for those customers who are in more cost-sensitive markets. Sales of Lubrajel RR increasedand Lubrajel RC decreased in 20202021 compared with 2019, and2020, mostly due to a 90% decrease in sales of Lubrajel RC. The Company believes that the decrease in sales of Lubrajel RC was primarily the result of a decrease in orders fromthe loss of one of the Company’s larger medical product customers that has been impacted by the coronavirus pandemic.due to a reformulation. The combined sales of both products accounted for 10%4% of the Company’s sales in 2020.2021. The Company is currently working with two companies that 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 decreasedincreased in 20202021 compared with 20192020 due to a decreasean increase in sales to twoone of the Company’s larger customers for this product that are located in areas, suchChina. Sales to this customer were impacted significantly in 2020 due to the pandemic, but sales levels increased as China, that were significantly impacted byChina’s economy began to emerge from the coronavirus.pandemic in 2021.

LUBRAJEL LC and LUBRAJEL FA are Lubrajel formulations that were developed for use in oral care applications. Sales of these products decreasedincreased in 20202021 compared with 20192020, primarily as the result of a decreasedue to an increase in orders from the Company’s primary customer,customers for these products, which the Company believes was due to improving conditions related to the coronavirus 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 all of the medical grades of Lubrajel decreased by 31%5% in 20202021 compared with 20192020 and accounted for approximately 19%14% of the Company’s gross sales in 20202021 compared with approximately 22%19% in 2019.2020. The decrease was due primarily to the loss one customer.

UNITED-GUARDIAN, INC.

PHARMACEUTICALS

RENACIDIN® is a prescription drug product that is used primarily to prevent and to dissolve calcifications in urethral catheters and in the urinary bladder. It is currently marketed in a plastic 30 mL single-dose bottle. SalesWhile the gross profit generated by Renacidin increased in 2021 compared with 2020, gross sales of Renacidin increaseddecreased by approximately 12%6% in 20202021 compared with 2019,2020, and represented approximately 36%34% of total Company gross sales. The Company believes that the increasedecrease in gross sales was due to the Company’s increased marketing efforts for thisdecision 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 includingat a dedicated websitedeeply discounted price. Due to the overly burdensome nature of the Medicaid rebates and expanded internet advertising.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. Sales of Clorpactin have been very consistent from year-to-year, and in 2020In 2021 sales of Clorpactin increased by 16% and represented approximately 6%5% of the Company’s gross sales.

TheSales of the Company’s pharmaceutical products are final when shipped, and are returnable only at the discretion of the Company 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 to sell; or (c) they are outdated (but not(d) the product is past its expiration date by no more than one year after their expiration date, which is ayear. These return policy that conforms topolicies are in conformance with standard pharmaceutical industry practice).practice.

INDUSTRIAL PRODUCTS

DESELEX™is a sequestering and chelating agent that is used primarily as 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 of this product decreased slightlyby less than 1% in 2021 compared to 2020 and represented less than 1% of Company sales. The decrease in sales was primarilyIn March 2022 the Company discontinued this product due to minimal sales and a decreasesignificant increase in orders from the Company’s primary customer for this product, which the Company believes was due to the impact of the coronavirus pandemic.raw material costs.

THOROCLENS is a chlorine-based industrial cleanser manufactured and packaged by the Company for a small company in New England. Sales of this product increased in 2020,2021, but, as with Deselex, represented less than 1% of Company sales.

DEVELOPMENT ACTIVITIES

In coordination with, and with input from, its marketing partners, the Company's research and development department develops 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.

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. Ashland, initiallywhich launched the product in Asia in June 2020, and followedglobally at the end of 2020. Since the launch, Lubrajel Oil PF has seen success with a global launch in November. Based on the amount of customer interest, as well as the qualification of the product for use by existing and newmany customers. The Company has seen increased orders which demonstrates how quickly customers Ashland has indicated that it considers this launchhave been able to be a success.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 is ready for marketing, and it is anticipated that Ashland will have formallywas launched this productby ASI in early February 2021. The product2021, and has already been qualified by some customers in the EMEA market.

LOWER-COST LUBRAJEL: Based on feedback from The Company received its marketing partners, the Company believes that there could be significant market potential for a version of Lubrajel for cosmetic use that can be produced and marketed at a lower cost than the current line of Lubrajel products. There are certain global markets that are not suitable for the current price points for Lubrajel, and the Company believes that the development of a lower-priced Lubrajel could open these new markets for the Company. The idea for a lower-cost Lubrajel has been discussed and considered by the Company for a number of years, and the Company believes that the time is right to focus on these development efforts. The goal is to develop a lower-cost product with similar benefits to some of the Company’s other Lubrajel cosmetic products, but which would not take away sales from those other products. The Company’s current development effortsfirst commercial order for this product have focused on evaluating competitive products and comparing their attributes to thosein the first quarter of the product we are developing. This initial research will enable the Company to determine the best path forward in developing a product that will be competitive in price sensitive markets. The Company anticipates that this initial research will be completed in early 2021, and that product development will begin shortly thereafter.2022.

OIL/WAX HYDRATION:The concept for this product is an anhydrous textured gel that can be added to the oil phase of a cosmetic formula.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. ASeveral prototype formula hasformulas have been tested for sensory benefits. Beforecreated and additional development work is conducted on this prototype wetesting will be discussingconducted in the marketability ofcoming months. Additional conversations with Ashland are scheduled to better understand the product with our distributors to determine appropriate productmarket applications, pricing, and anticipated customer interest. A clear understanding of what pricing the market will support isadditional testing that may be necessary before determining the next steps in this project.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. PrototypesThree prototypes have been developed, and hydration testing is scheduled for March 2021. The resultshas 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 testingwinter to determine which formulations will determinemove forward and what the next steps will be in this project.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 UK 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. WeThe 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 ourits marketing partners during all of the stages of product development to gain feedback on this product,ensure that our ingredients are meeting customer needs.

LUBRAJEL DV PF and pursueLUBRAJEL MS PF: The Company developed two additional markets where we believe that this product couldproducts 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 successful.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 20202021 were $451,208$478,642 compared with $397,391$451,208 in 2019.2020. The Company expects its research and development expenses in 20212022 to be comparable to those of 2020.2021. 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 PATENTS

The Company strongly believes in protecting its intellectual property and intends, whenever reasonably possible and economically practical, to obtain patentsproperty. In the past, the Company filed for patent protection in connection with many of its product development program. The Company currently holds several trademarks relating to its products. In recentproducts and processes, and over the years the Company has relied more on trade secrets and proprietary formulations and manufacturing methods to protect its intellectual property rather thanwas issued at least 32 patents, sinceall of which are now expired. However, under current patent law the filing of a patent now provides detailed proprietary information that can be copiedused by companies in other countries where enforcement would be difficult and expensive, such as in China. TheAs a result, the Company believes thatdecided in many cases it is betterrecent years to generally forego patent protection and rely instead on trade secret protection to protect its intellectual property, in other ways that do not require the disclosure ofincluding its proprietary information. All of the patents that had previously been issued to the Company have expired.product formulations and manufacturing methods. The Company will continue to fileconsider filing patent applications in situations where it believes that relying on trade secrets would be insufficientnot provide sufficient protection.

The various trademarks and trade names owned or used by the Company in its business are of varying importance to the Company. The most significant trademarks are Lubrajel^®Lubrajel®, Renacidin^®Renacidin®, and ClorpactinClorpactin®.^®.

DOMESTIC SALES

COSMETIC INGREDIENTS:

In the United States the Company's cosmetic ingredient products are marketed and distributed exclusively by ASI in accordance with a marketing agreement entered into in 1996 with its predecessor company, International Specialty Products (“ISP”). That agreement was for the marketing of the Company’s cosmetic ingredients in North, Central, 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. ASI also has the exclusive right to market twoglobally four of the Company’s products: Lubrajel Marine, which was the second product in the Company’s Lubrajel Natural line of products; and Lubrajel BA, an oral care product which was specifically developed for ASI in 2012 but which, to date, has not had significant sales.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. The current agreement with ASI automatically renewed on January 1, 20202022 and will automatically renew again on January 1, 20222024 unless either party chooses to terminate, which can be done by giving 60 days’ notice prior to the then expiration date.

Revenue from domestic sales of all Company products accounted for approximately 80% of the Company’s total sales in 2020, compared with 82% in 2019.both 2021 and 2020. Domestic sales of cosmetic ingredients accounted for approximately 30%41% of total Company sales in 2020,2021, compared with 40%30% in 2019.2020. Sales to the Company’s largest marketing partner, ASI, accounted for approximately 29%40% of total Company sales in 20202021 and 39%29% of sales in 2019.2020. 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, 68%74% of ASI’s sales in 20202021 were to customers in foreign countries, compared with 75%68% in 2019.2020.

PHARMACEUTICALS:

The Company’s 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 41%34% of Company sales in 2020,2021, compared with approximately 30%41% in 2019.2020.

During 20202021 and 2019,2020, the Company participated in various government drug rebate programs related to the sale of Renacidin,Renacidin®, its most important pharmaceutical product. These programs include the Medicaid Drug Rebate Program (MDRP), Section 340B Drug Pricing Program (340B), Veterans Affairs Federal Supply Schedule (FSS), and the Medicare Part D Coverage Gap Discount Program (CGDP). These programs requiredrequire the Company to either sell its product at a discounted price, or,price. In addition, during 2020, the Company participated in the case of Medicaid Drug Rebate Program (MDRP), which required the Company to pay a significant rebate to the various states where Renacidin was being provided to Medicaid patients. The Company’s sales,patients, as reported, are net of these rebates, some ofwell as the Section 340B Drug Pricing Program (340B), which are estimated and are recorded inrequired the same period that the revenue is recognized.

AsCompany to sell their product at a result ofdeeply discounted price. Due to the overly burdensome nature of thethese Medicaid rebates it became clear toon the Company, in October 2020 that it was no longer profitable forand the deeply discounted pricing associated with the 340B Program, the Company to continue participatingterminated its participation in the Medicaid orMDRP and the 340B programs. As a result, on October 30, 2020, the Company informed the Centers for Medicare & Medicaid Services (CMS) and the Health Resources and Services Administration (HRSA) of its intention to terminate its Medicaid Drug Rebate Agreement and its 340B Drug Pricing Agreement,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’s 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 PRODUCTS:

The Company’s non-pharmaceutical medical products, such as its catheter lubricants and oral care products, are sold directly by the Company directly to the end users or to contract manufacturers utilized by the end users. These products are also are available for sale on a non-exclusive basis bythrough its marketing partners as well.if they choose to market those products. Domestic sales of the Company’s medical products accounted for approximately 8%4% of the Company’s total sales in 2020,2021, compared with 11%8% in 2019.2020. Although all shipments of medical products 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 arecould be marketed globally.globally.

INDUSTRIAL PRODUCTS:

Domestic sales of the Company’s specialty industrial products accounted for less than 2% of Company sales in both 20202021 and 2019.2020. These products are sold directly to end-user customers or their contract manufacturers, who incorporate these products into their finished products.

FOREIGN SALES

In 2020both 2021 and 2019,2020, approximately 20% and 18%, respectively, 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 accounted for approximately 9% of Company sales in 20202021 and 7% in 2019,2020 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 20202021 and 2019.2020.

Because all shipments to the Company’s largest marketing partner, ASI, are delivered to ASI’s warehouses in the U.S., all sales to ASI are included in “Domestic Sales”, 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, 68%74% of ASI’s sales of the Company’s products in 20202021 were to customers in foreign countries, compared with 75%68% in 2019.2020. ASI’s largest foreign market in both 20202021 and 20192020 was China, which accounted for approximately 33%41% of ASI’s sales of Company products in 20202021 and 49%34% in 2019.2020.

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. In recent years, sales have been negatively impacted by the strength of the U.S. Dollar relative to other currencies, particularly the Euro, which has resulted in some of the Company’s products being more price sensitive than they had been in the past. It has also enabled some of the Company’s competitors to take some market share from the Company in those markets. As a result of the weakeningweakened dollar in the second half of 2020 and the first half of 2021 , the Company’s products became a little more competitive than they have been overin Europe, but in the past few years.

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.

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.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 ISP/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 20202022 for additional two-year terms. The current contract ends on December 31, 2021.2023.

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 88%94% of the raw material purchases by the Company in 20202021 and 84%88% in 2019.2020.

UNITED-GUARDIAN, INC.

INVENTORIES, RETURNS, and ALLOWANCES

It is important for the Company to maintain moderate inventory levels of certain of its 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's business.

BACKLOG

The Company currently does not have any significant backlog of orders.

SEASONALITY

Due to the nature of the Company's business and the types of products it markets, it is not subject to any significant seasonal fluctuations in sales.

CUSTOMERS

The Company’s cosmetic ingredients are currently marketed and sold globally by five marketing partners. Those marketing partners in turn market and distribute those products to their customers. Although the Company depends on those marketing partners for the marketing and distribution of its cosmetic ingredients, it is confident that if any of its marketing partners were to decide not to sell the Company’s products, or if the Company chose to replace one or more of those marketing partners, it would be able to put in place new marketing agreements to service its customers in all the geographic areas affected. If necessary, the Company would also be able to sell directly to the end users of its products until such time as a new marketing partner is put in place.

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

COMPETITION

The Company has some products or processes that are either proprietary or have some unique characteristics. Its Lubrajel line of products is well known globally and has a long-standing reputation for high quality. The Company believes that these characteristics will be advantageous to the Company in its continuing efforts to compete effectively with other companies marketing similar products. The pharmaceutical, health care, and cosmetic industries are all highly competitive, and during 20202021 the Company experienced a high level of competition for its cosmetic ingredients both in the U.S. and in foreign markets. Unlike in 2019, in 2020In 2021 the value of the U.S. dollar declinedgradually strengthened relative to some other foreign currencies, in particular the Euro, which made the Company’s products a little moreless competitive in those markets than it had been when the dollar was not as strong. Regardless of the changes in recent years. Despite the more favorable currency situation, the Company believes that there will continue 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, in order to remain competitive. The Company intends to continue 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 competitive situationlevel of competition as there is for some of the Company’s older products, and itproducts. The Company is optimistic that theits development of unique 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.

ISO 9001:2015 REGISTRATION

On July 23, 2018, the Company was certified by Underwriters Laboratories, Inc. to be 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 needed 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.

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's products. The Company and many of the Company's products are subject to certain government regulations. Some products developed and sold by the Company 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 to do so a 510(k) pre-market notification to the FDA would be required to demonstrate that the device is at least as safe 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 evaluation under an Investigational New Drug Application, and the subsequent submission to the FDA of a New Drug Application.

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

The Company's 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's operating expenses are directly attributable to complying with federal, state, and local environmental statutes and regulations. In 20202021 and 2019,2020, the Company incurred approximately $13,000$32,000 and $39,000,$13,000 respectively, in federal, state, and local environmental law compliance expenses. There was no material financial or other impact on the Company as a result of compliance with environmental laws.

ENVIRONMENTAL, SOCIAL, and CORPORATE GOVERNANCE

As a manufacturer with global sales, the Company is committed to sustainable growth and lowering its impact on the local community. It is committed to measuring and monitoring its impact on the environment and continually improving. The Company complies with all federal/state/local environmental regulations, and has recently initiated a carbon footprint monitoring program and will be setting goals to lower its impact on the environment during the coming years. The Company has also joined initiatives for core raw materials, such as RSPO, to ensure that it supports suppliers in protecting the environment and the people in it. It is committed to using green chemistry principles to produce biodegradable, natural, and safe products with renewable feedstocks.

UNITED-GUARDIAN, INC.

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

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

a) Disciplinary sanctions to deal with policy violations

b) Policy on information security

c) Polices on corruption

d) Whistleblower procedure to report ethics issues

a) Roundtable on Sustainable Palm Oil (RSPO) Supply Chain Certification

b) Formal assessment of supplier’s progress with regards to REACH requirements

c) No use of tin, tantalum, tungsten, gold, and/or their derivatives

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

UNITED-GUARDIAN, INC.

HEALTH & SAFETY

The Company values its 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 2524 employees, 4 of whom serve in an executive capacity, 16 in research, quality control and manufacturing, 32 in maintenance and construction, and 2 in office and administrative support services. Of the total number of employees, 22 are full time.

Item 1A. Risk Factors.

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

Item1B. Unresolved Staff Comments.

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

Item 2. Properties.

The Company maintains its principal office and factory, and conducts its research, at a 50,000 square foot facility on a 2.7-acre parcel at 230 Marcus Boulevard, Hauppauge, New York 11788, which the Company owns. 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 has fully developed the 2.7 acres, and fully utilizes the building occupying the land. The Company believes that the aforementioned property is adequate for its immediately foreseeable needs. The property is presently unencumbered and, in the Company’s opinion, is adequately insured.

Item 3. Legal Proceedings.

None.

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

The Common Stock of the Company has 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 stockCommon Stock traded on the American Stock Exchange under the same symbol.

Holders of Record

As of March 1, 2021,2022, there were 395385 holders of record of Common Stock.

Cash Dividends

On May 18, 2021, the Company’s Board of Directors declared a semi-annual cash dividend of $0.48 per share, which was paid on June 7, 2021 to all stockholders of record as of May 31, 2021. On November 16, 2021, the Company’s Board of Directors declared a semi-annual cash dividend of $0.65 per share which was paid on December 7, 2021 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.

On May 15, 2019, the Company’s Board of Directors declared a semi-annual cash dividend of $0.55 per share, which was paid on June 14, 2019 to all stockholders of record as of May 31, 2019. On November 20, 2019, the Company’s Board of Directors declared a semi-annual cash dividend of $0.55 per share, which was paid on December 10, 2019 to all stockholders of record as of December 3, 2019.

The Company is not providing information responsive to this Item as it is choosing to voluntary comply with the revisions to Item 6 of Form 10-K contained in SEC Release No. 33-10890, which eliminated the disclosure requirements contained in Item 301 of Regulation S-K. Prior to the issuance of SEC Release 33-10890 the Company was not required to provide the information because the Company was a small business issuer.6. [RESERVED]

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

Impact of the Coronavirus Pandemic

In March 2020, the spread of the coronavirus (COVID-19) began to cause disruptions among businesses and markets worldwide. On March 20, 2020, the Governor of New York issued an executive order which closed non-essential businesses. The Company, as a manufacturer of pharmaceutical and medical products, was considered an essential business, and continued to operate throughout the pandemic. When the spread of the coronavirus was at its worst in New York, the Company modified its staffing schedule in order to decrease employee density as much as possible, with employees working 7 days a week on altered hours, and later on an every-other-week work schedule with limited hours. Despite the reduced schedule the Company was able to maintain adequate production and shipping schedules and was able to fill all orders on a timely basis. As things improved, the Company gradually increased its working hours and employee density until it resumed its regular working schedule in June 2020. Throughout the pandemic the Company was able to maintain its full payroll, all employees received their full pay, and no employees were furloughed or dismissed.

While the coronavirus pandemic (“pandemic”) continues to 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 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. 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 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 havewere not been impacted by the coronavirus pandemic salesin 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 cosmetic ingredients and medical products were significantly impacted, particularlygross profit margins in the second half of 2020. Sales of the Company’s cosmetic ingredients in 2020 decreased by 33% compared with 2019.future. The decrease was primarily the result of lower sales to ASI, the Company’s marketing partner in China, and was caused primarily by factors related to the coronavirus, including (a) lower consumer demand in China for many of the products in which the Company’s products are used; (b) manufacturing disruptions in China resulting from the impact of the coronavirus on manufacturing facilities; and (c) excess inventory levels due to overstocking on the part of both the Company’s marketing partner for China as well its sub-distributors in China. The overstocking was due to the uncertainty on the part of the marketing partner about beingCompany has been able to continue to get product from the Company duringmaintain production throughout the pandemic.

Since the Company’s cosmetic ingredients are marketed in many different countries, it is difficultThere continues to projectbe uncertainty regarding the future impact of the coronavirus pandemic on the Company’s global cosmetic ingredientoperations or financial results. While the impact on the Company’s’ sales sincelessened considerably in 2021, the virus continues to impact different countries at different times and to very different extents. The Company is hopeful that as vaccinations increase, the global economic situation will gradually improve. However, based on the current situation, as well as future projections by different analysts, the Company anticipates that the pandemic will continue to negatively impact sales of the Company’s cosmetic ingredients throughout most or all of 2021.

The Company also believes that the coronavirus impacted sales to two of the Company’s four major medical product customers whose orders decreased in 2020, and may have been a factor in the loss of a third (although the Company has not yet been able to confirm that as the reason for that lost business). Overall sales of the Company’s medical products decreased by 31% compared with the corresponding periods in 2019.

With the continuing uncertainty as to what the duration and future impact of the pandemic will be, the Company isstill unable to provide an accurate estimate or projection as to what the continuingfuture impact of the coronaviruspandemic will be on the Company’s future operations or its financial results in the future. However, as of the date of this report, theresults. The Company does not anticipate thatexpect the coronavirus pandemic will affectcarrying value of its assets or its liquidity to be impaired by the abilitypandemic.

Another result of the Company to obtain raw materials and maintain production. The Company has price protection on some but not all of its most important raw materials, has multiple sources for many of its raw materials, andpandemic has been ablea significant increase in inflation during 2021. While it is unknown whether inflation will continue to maintain sufficient inventoryincrease or will begin to decrease during 2022, continued inflation is likely to result in further increases in raw material costs, shipping costs, and production levels to enable it to fulfill sales orders on a timely basis.internal labor costs, which could impact the Company’s future profit margins.

Critical Accounting Policies

The Company’s 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 Company 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 its historical experience and other relevant factors when developing its 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’s significant accounting policies. The following accounting policies are those that the Company considers critical to an understanding of the financial statements because their application places the most significant demands on the Company’s judgment. The Company’s financial results might have been different if other assumptions had been used or other conditions had prevailed.

Marketable Securities

The Company’s marketable securities include investments in equity and fixed income mutual funds, and U.S. Government securities.funds. The Company’s marketable equity securities are reported at fair value with the related unrealized and realized gains and losses included in net income. U.S Treasury Bills are considered debt securities and realized gains or losses, if any, are reported in other comprehensive income. Realized gains or losses on mutual funds are determined on a specific identification basis. The Company evaluates its 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’s ability and intent to hold the investment for a period of time which may be sufficient for anticipated recovery of market value. The Company records 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 20202021 and 2019,2020, the Company did not record an impairment charge regarding its investment in marketable securities because management believes, based on its evaluation of the circumstances, that the decline in fair value below the cost of certain of the Company’s marketable securities is temporary.

UNITED-GUARDIAN, INC.

Revenue Recognition

The Company records 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’s principal source of revenue is product sales.

The Company’s sales, as reported, are subject to a variety of deductions, some of which generally are estimated andestimated. These deductions are recorded in the same period thatin which the revenues arerevenue is recognized. Such variable consideration,deductions, primarily related to the sale of the Company’s pharmaceutical products, includesinclude chargebacks from the United States Department of Veterans Affairs (“(‘VA”), rebates in connection with the Company’s 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 20202021 and 2019,2020, the Company participated in various government drug rebate programs related to the sale of Renacidin,Renacidin®, its most important pharmaceutical product. These programs include the Medicaid Drug Rebate Program (MDRP), Section 340B Drug Pricing Program (340B), Veterans Affairs Federal Supply Schedule (FSS), and the Medicare Part D Coverage Gap Discount Program (CGDP). These programs requiredrequire the Company to either sell its product at a discounted price, or,price. In addition, during 2020, the Company also participated in the case of Medicaid Drug Rebate Program (MDRP), which required the Company to pay a significant rebate to the various states where Renacidin iswas provided to Medicaid patients.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’s 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.

As a result of the overly burdensome nature of the Medicaid rebates it became clear to the Company in October 2020 that it was no longer profitable for the Company to continue participating in the Medicaid or the 340B programs. As a result, on October 30, 2020, the Company informed the Centers for Medicare & Medicaid Services (CMS) and the Health Resources and Services Administration (HRSA) of its intention to terminate its Medicaid Drug Rebate Agreement and its 340B Drug Pricing Agreement, 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).

As long as a valid purchase order has been received and future collection of the sale amount is reasonably assured, the Company recognizes revenue from sales of its products when those products are shipped, which is when the Company’s performance obligation is satisfied. The Company’s cosmetic products are shipped “Ex-Works” from the Company’s 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-pharmaceutical medical products are deemed final upon shipment, and there is 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’s pharmaceutical products are final upon shipment unless (a) they are found to be defective; (b) the product is damaged in shipping; or (c) the product is outdated (buttoo close to its expiration date for the customer to sell; or (d) the product is expired but is not more than one year after theirits expiration date, which is adate. These return policy which conforms topolicies are in conformance with standard pharmaceutical industry practice).practice. The Company estimates an allowance for outdated material returns based on previous years’ historical returns of its pharmaceutical products.

The Company does 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 has 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. Due to COVID-19,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, 20202021 and December 31, 2019,2020, the allowance for doubtful accounts receivable was $14,017$20,252 and $21,178,$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 has distribution agreements with certain distributors of its pharmaceutical products that entitle those distributors to distribution and services-related fees. The Company records distribution fees, and estimates of distribution fees, as offsets to revenue.

Accounts Receivable Allowance

The Company performs ongoing credit evaluations of the Company’s customers and adjusts credit limits, as determined by a review of current credit information. The Company continuously monitors collection and payments from customers and maintains an allowance for doubtful accounts 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’s credit losses have historically been low and within expectations, the Company 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’s significant customers would have a significant impact on the Company’s results of operations and cash flows. As mentioned above, the Company has not experienced significant issues with the collection of its accounts receivable balances due to the COVID-19 pandemic.

Inventory Valuation Allowance

In conjunction with the Company’s 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 believes that it has 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 has performed an evaluation of its inventory on hand as of the date of this report and believes the reserve is 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 Operations

Year ended December 31, 20202021 compared with the year ended December 31, 2019:2020:

Sales

Sales decreased 19%increased 27% from $13,599,084 in 2019 to $10,986,081 in 2020.2020 to $13,929,629 in 2021. The decreaseincrease was due primarily to decreasesincreases in sales of the Company’s cosmetic products and non-pharmaceutical medical products. Those decreases were partially offset by an increase in sales ofproducts as global economies began recovering from the Company’s pharmaceutical products, primarily Renacidin.coronavirus pandemic during 2021.

The decreaseincrease in sales was the result of the following specific changes in sales in the different product categories:

Sales of the Company's cosmetic ingredients decreasedincreased by 61% from $6,377,323 in 2019 to $4,274,586 in 2020.2020 to $6,872,714 in 2021. The decreaseincrease was attributable primarily to a decreasean increase in sales of the Company’s Lubrajel line of products to ASI, the Company’s largest marketing partner, whose purchases decreasedincreased by 40%74% in 2020.2021. Aggregate sales to the Company’s four other marketing partners increased by 22% from $914,690 in 2019 to $992,951 in 2020.2020 to $1,210,046 in 2021. That increase was primarily attributable to Company’s marketing partner in the UK,United Kingdom (“UK”), whose sales increased by 42%, from $361,156 in 2019 to $445,402 in 2020. There was also2020 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 three other direct customers of the Company.

In addition to the above changes in marketing partner sales, as a result of the termination in December 2019 of the Company’s marketing agreement with its former marketing partner in Korea, there were no sales to that former marketing partner in 2020, compared with sales of $88,447 in 2019. Since December 2019 the Company’s marketing efforts in Korea are being handled by ASI.

The decrease in sales to ASI was due to a number of factors, the principal one being the impact of the coronavirus pandemic, which significantly impacted ASI’s sales of the Company’s products in China. The decrease in ASI sales in China was the result of a number of factors, including (a) lower consumer demand in China for many of the products in which the Company’s products are used; (b) manufacturing disruptions in China resulting from the impact of the coronavirus on manufacturing facilities; and (c) excess inventory levels of the Company’s products resulting from overstocking on the part of both the Company’s marketing partner for China as well as its sub-distributors in China, due to the uncertainty of being able to restock product during the pandemic. Since the Company’s cosmetic ingredients are marketed globally by its marketing partners in many different countries, and since the virus continues to impact countries at different times and to very different extents, it is difficult to project the future impact of the coronavirusglobal pandemic on the Company’s global cosmetic ingredient sales. Untilconditions 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. Based on sales information provided to the Company by ASI, 68%74% of ASI’s sales in 20202021 were to customers in foreign countries, compared to 75%68% in 2019.2020. ASI’s largest foreign market in both 20202021 and 20192020 was China, which accounted for approximately 33%41% of ASI’s sales in 20202021 and 49%34% of sales in 2019.2020.

There continues to be global competition from Asian and European competitors selling products that are competitive with those sold by the Company and which are marketed at lower prices than those produced by the Company. The weakeningstrengthening of the U.S. dollar relative to the Euro in 2020the second half of 2021 made the Company’s products a little moreless competitive in 2020 than they had been in the past few yearsfirst half of 2021, when the dollar had continuedbeen weaker relative to strengthen against the Euro. The Company continues to work closely with its marketing partners to price its 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 bring in new customers. However, the Company expects the European market to remain very competitive based on the continuing competition 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 2021.2022.

Because there are fees, rebates, and allowances associated with sales of the Company’s two pharmaceutical products, Renacidin and Clorpactin, discussion of the Company’s pharmaceutical sales includes references to both gross sales (before fees, rebates and allowances) and net sales (after fees, rebates and allowances). NetGross sales of the Company’s two pharmaceutical products, Renacidin and Clorpactin, together increaseddecreased by 4%, from $4,091,817 in 2019 to $4,519,052$5,959,705 in 2020 with Renacidin accounting for most of the increase.to $5,748,244 in 2021. Gross sales of Renacidin increaseddecreased by 6%, from $4,635,019 in 2019 to $5,347,827 in 2020 to $5,041,460 in 2021, while gross sales of Clorpactin increased by 16% from $603,209 in 2019 to $611,878 in 2020.2020 to $706,784 in 2021. The Company believes that much of the increasedecrease in Renacidin sales was primarily due to increased awareness of the product by both patients, caregivers, and physicians, which the Company believesterminating its participation in the Medicaid Drug Rebate Program on December 31, 2020.

UNITED-GUARDIAN, INC.

The decrease in gross sales was partially offset by a decrease in pharmaceutical related fees, rebates and allowances of $427,733 (30%). The decreases in these fees, rebates and allowances were primarily the result of the Company’s internet advertising campaign, along withtermination of its dedicated Renacidin.com website. Theparticipation in the Medicaid Drug Rebate Program at the end of 2020. Due to the overly burdensome nature of the Medicaid rebates that the Company intendshad to pay under this program, the Company determined that it was no longer profitable for the Company to continue these internet marketing efforts during 2021.

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 a resultthe 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 sales ofgross profit from Renacidin sales. Although the Company’s pharmaceutical products, there was a commensurate increase in the allowancesCompany will no longer be incurring Medicaid-related rebate costs, it will continue to incur costs related to the sales of those products,other allowances, including Medicare rebates, distribution fees, chargebacks on VA sales, Medicaid and Medicare rebates, and outdated material returns. Those fees, rebates, chargebacks, and other allowances increase proportionally as sales of the Company’s pharmaceutical products increase, and in 2020 the allowances related to pharmaceutical sales increased by $294,244 (26%) compared with 2019, primarily due to the increase in Renacidin sales.

Sales of the Company’s medical products decreasedincreased by 6%, from $2,968,806 in 2019 to $2,052,961 in 2020. Approximately 37%2020 to $2,171,204 in 2021. Despite losing one of that decrease was due to the loss of oneits major medical product customers in 2020, medical product sales rebounded in 2021 with increases in orders from two of the Company’s four majorlarger medical product customers. One of the other customers is located in China and theIndia. The Company believes that the decreaseincreases in those orders from that customer, as well as from one of its other major medical product customers notwere due to improving economic conditions in China, was related to the impact of the coronavirus pandemic. The Company is hopeful that as the global markets begin to recover from the pandemic, orders from those affected customers will gradually increase.countries.

Sales of the Company's industrial products, as well as other miscellaneous products, decreasedincreased by 8%, from $161,138 in 2019 to $139,482 in 2020.2020 to $150,387 in 2021. The decreaseincrease was primarily due to a decreasean increase in sales to two of the Company’s industrial product customers, which operateare located in areas whose operations werehad been negatively impacted by the Coronavirus pandemic.pandemic, resulting in a decrease in their orders in 2020.          

Gross Profit on Sales

Gross profit on sales was 59% in 2021 compared with 56% in 2020 compared with 58%2020. The increase in 2019. The decreasegross profit was due to thetwo main factors: 1) increased sales of Renacidin in 2020 compared with 2019, combined with the decrease in sales of the Company’s Lubrajel line of products in 2021, which carry a higher profit margin. Renacidin carries a lower gross profit margin than the Company’s otherpharmaceutical products, dueand 2) the significant reduction in sales allowances related to the contract manufacturing costs connected withCompany’s pharmaceutical products in 2021 helped to increase the manufacture of the product, as well as the rebates, discounts and allowances associated with it. In 2020, Renacidin represented 36% of the Company’s gross salesprofit on those products in 2021 compared with 26% in 2019.2020.

Operating Expenses

Operating expenses decreasedincreased from $2,148,375 in 2019 to $2,026,368 in 2020.2020 to $2,035,970 in 2021. The decreaseincrease was mainly attributable to decreasesan increase in payroll, payroll related expenses,consulting and employee fringe benefits. The Company was able to reduce these expenses during 2020 due to a lower employee head count.professional fees. The Company anticipates that operating expenses will remain relatively consistent for 2021.2022.

UNITED-GUARDIAN, INC.

Research and Development Expenses

Research and development expenses increased from $397,391 in 2019 to $451,208 in 2020.2020 to $478,642 in 2021. The increase was primarily related to an increase in payroll and payroll related expenses and an increase in depreciation expense of R&D equipment.expenses.

Investment Income

Investment income increased from $203,329 in 2019 to $226,245 in 2020.2020 to $233,857 in 2021. The increase was due to an increase in dividend income from both stock and bond mutual funds. In early 2020, the Company began to shift its investment strategy from lower-yielding U.S. Treasury Bills towards short and intermediate-term bond funds that were yielding higher returns. During 2019, the Company’s investment portfolio was more heavily weighted in U.S. Treasury Bills, which yielded interest income that was less than the dividend income recognized in 2020 from the Company’s stock and bond mutual funds.

Net Gain(loss) gain on Marketable Securities

The net (loss) gain on marketable securities decreased from $431,076 in 2019 toa net gain of $298,585 in 2020.2020 to a net loss of $23,018 in 2021. The decrease was primarily due to the Company recognizing lower unrealizedhigher realized gains on its stock and bondsales of mutual funds in 2020, which totaled $415,595, compared withto the same periodrealized gains on sales of mutual funds in 2019.2021 of $111,917.

Provision for Income Taxes

The provision for income taxes decreasedincreased from $1,268,659 in 2019 to $856,022 in 2020.2020 to $1,219,383 in 2021. This decreaseincrease was due to a decreasean increase in income before taxes. The Company’s effective income tax rate was 20.7% in 2021 and 20.6% in 2020 and 21.1% in 2019. The Company’s effective income tax rate in 2020 was slightly lower than in 2019 due to higher research and development tax credits in 2020 compared with 2019.2020.

Liquidity and Capital Resources

Working capital decreased from $10,224,222 at December 31, 2019 to $9,832,326 at December 31, 2020.2020 to $9,245,629 at December 31, 2021. The current ratio decreased from 8.6 to 1 at December 31, 2019 to 8.0 to 1 at December 31, 2020.2020 to 5.0 to 1 at December 31, 2021. The decrease in working capital was mainly due to decreases in cash and accounts receivable and an increase in dividends paid during 2021, combined with increases in accounts payable, accrued expenses.expenses and deferred revenue.

Accounts receivable (net of allowance for doubtful accounts) as of December 31, 2020 decreased2021 increased from $2,098,411 in 2019 to $1,387,698 in 2020.2020 to $1,813,346 in 2021. The decreaseincrease in accounts receivable was due to the decreaseincrease in sales the Company experienced during 20202021 due to global economies recovering from the coronavirus pandemic.pandemic, especially in the fourth quarter of 2021. The receivables turnover, or “Days Sales Outstanding”, for 20202021, was 5842 days, compared with 5158 days in 2019.2020. The increasedecrease was mainly the resultindicative of the improvement in customers’ ability to more efficiently process payments as economies recovered from the pandemic during 2021. During 2020, the Company experiencingexperienced minor delays in receiving payments from some customers during 2020 due to the pandemic.customers. The Company’s allowance for doubtful accounts receivable decreasedincreased from $21,178 in 2019 to $14,017 in 2020 to $20,252 in 2021, and the Company believes that the net balance of its accounts receivable as of December 31, 20202021 was, and continues to be, fully collectible.

The Company generated cash from operations of $5,313,277 in 2021 compared with $3,594,240 in 2020 compared with $4,476,1112020. The increase in 2019. The decrease in 20202021 was primarily due to a decreasean increase in net income in 20202021 compared with 2019.2020, combined with an increase in accounts payable, accrued expenses and deferred revenue.

Net cash provided by investing activities was $1,071,987 for the year ended December 31, 2019 compared with net cash used in investing activities ofwas $468,676 for the year ended December 31, 2020.2020 compared with $183,475 for the year ended December 31, 2021. This decrease in net cash provided byused in investing activities was mainly due to the executiondecreased purchases of the Company’s strategy to purchase additional short and intermediate-term bond mutual funds in 2020.marketable securities during 2021.

UNITED-GUARDIAN, INC.

Net cash used in financing activities was $3,582,431$5,190,033 and $5,049,922$3,582,481 during the years ended December 31, 20202021 and 2019,2020, respectively. The decreaseincrease was due to the payment of lowerhigher dividends in 20202021 compared with 2019.2020.

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

The Company has no material commitments for future capital expenditures and no material cash requirements of immediate concern.

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

On March 27, 2020, the coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was signed into law. The CARES Act contains a provision known as the Employee Retention Credit (“ERC”), a refundable payroll tax credit for qualified wages paid to retained full-time employees between March 13, 2020 and December 31, 2020. The Consolidations Appropriations Act (CAA), signed into law on December 27, 2020, significantly modified and expanded the provisions of the ERC to include wages paid in the first half of 2021. The Company has determined that it has qualified for this credit in the first quarter of 2021 and anticipates utilizing benefits under this act to aid its liquidity position. For 2021, the ERC provides employers a refundable federal tax credit equal to 70% of the first $10,000 of qualified wages and benefits paid to retained employees between January 1, 2021 and June 30, 2021. Credits may be claimed immediately by reducing payroll taxes sent to the Internal Revenue Service. To the extent that the credit exceeds employment withholdings, the employer may request a refund of prior taxes paid.

New Accounting Pronouncements

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

Item7A.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.

Item 9A. Controls and Procedures.

(a) Evaluation of Disclosure Controls and Procedures

The Company’s management, with the participation of the Company’s 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, 2020.2021. On the basis of that evaluation, management concluded that the Company’s 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 its Principal Executive Officer and Principal Financial Officer as appropriate, to allow timely decisions regarding required disclosure.

UNITED-GUARDIAN, INC.

(b) Management’sManagement’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’s internal control system is designed to provide reasonable assurance to management and to the Company’s 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’s Principal Executive Officer and Principal Financial Officer, management conducted an evaluation of the effectiveness of the Company’s 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). Based on management’s evaluation under the framework in Internal Control—Integrated Framework, management concluded that the Company’s internal control over financial reporting was effective as of December 31, 2020.2021.

This Annual Report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Since the Company is a non-accelerated filer, management’s report is not subject to attestation by the Company's 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’s internal control over financial reporting in the fourth quarter of 20202021 that materially affected, or would be reasonably likely to materially affect, the Company’s internal control over financial reporting.

(d)Limitations of the Effectiveness of Internal Controls

The effectiveness of the Company’s 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’s disclosure controls and procedures and internal control over financial reporting will detect all errors or fraud. However, the Company’s control systems have been designed to provide reasonable assurance of achieving their objectives, and the Company’s Principal Executive Officer and Principal Financial Officer have concluded that the Company’s disclosure controls and procedures and internal control over financial reporting are effective at the reasonable assurance level.

Item 9B. Other Information.

None.

PART III

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Not applicable.

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 2021 Proxy Statement.

UNITED-GUARDIAN, INC.

Code of EthicsPART III

The Company has adopted a Code of Business ConductItem 10. Directors, Executive Officers 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.Corporate Governance.

EXECUTIVE OFFICERS

Set forth in the table immediately below are the names 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 the regular meetings the additional directors’ meetings, and the Annual Meeting of Stockholders.

AUDIT COMMITTEE

The Company has an Audit Committee (“Committee”) that is currently composed of three of the Company’s independent 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’s accounting and financial reporting processes, including preparation of financial statements and audits; (b) assuring the Company’s compliance with all legal, regulatory, and ethical responsibilities; (c) evaluating the qualifications and independence of the Company’s independent accountants; and (d) assessing the effectiveness of the Company’s internal controls and risk management procedures. The Committee currently meets five 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 COMMITTEE

The information required by this item is incorporated herein by referenceBoard has a compensation committee which was formed in 1999 for the purpose of recommending to the section entitled "CompensationBoard the compensation of Directorscorporate officers and Executive Officers"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 advisor 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 Company's 2021 Proxy Statement.

Committee has engaged a consultant to provide advice on compensation.

The information requiredCompensation Committee does not set compensation of directors. Instead, the full Board acts on recommendations made by this item is incorporatedthe 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 referenceBoard and Committee members in their service to the section entitled "Voting SecuritiesCompany, and Principal Stockholders"recent changes that may result in an increase or decrease in the Company's 2021 Proxy Statement.responsibilities or time commitment of a Board and Committee member.

NOMINATING COMMITTEE

The information requiredBoard does not have a Nominating Committee. The full Board fulfills the role of a nominating committee. Final selections are made by this itema majority of the independent directors. Ken Globus is incorporatednot independent as that term is defined by referencethe listing standards of NASDAQ. It is the position of the Board that it is appropriate for the Company not to have a separate nominating committee because the section entitled “Directorssize, composition and Executive Officers"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 so in the Company's 2021 Proxy Statement.future.

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:

Audit Fees

The aggregate fees that have been billed by Baker Tilly US, LLP (“Baker Tilly“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 20192020 and the audit of the Company’s financial statements for the 20192020 fiscal year were $89,000.$89,500.

The aggregate fees that have been, or are expected to be, billed by Baker Tilly for the quarterly reviews of the Company’s financial statements for the first, second and third quarters of 20202021 and the audit of the Company’s financial statements for the 20202021 fiscal year are $89,500.

During 2020, the Company paid Raich Ende Malter & Co (“Raich”) $5,000 in connection with the audit of the Company’s financial statements for the 2019 fiscal year.$90,500.

Audit-Related Fees

During 2020,2021, there were no fees paid to Baker Tilly in connection with the Company's 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's financial statements and not reported under "Audit Fees" above.

Tax Fees

There were no fees billed by Baker Tilly 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 Baker Tilly in 20202021 or 2019.2020.

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 ControllerChief 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.

UNITED-GUARDIAN, INC.

Item 15. Exhibits, Financial Statement Schedules.

None.

Item 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.

EXHIBIT INDEX

EXHIBIT INDEX

Exhibit # Description

UNITED-GUARDIAN, INC.

P: Indicates a paper filing

* Filed herewith

INDEX TO FINANCIAL STATEMENTS

(For the years ended

December 31, 20202021 and 2019)2020)

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 sheets of United-Guardian, Inc. (the "Company") as of December 31, 20202021 and 2019,2020, the related statements of income, stockholders' equity, and cash flows, for the years 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, 20202021 and 2019,2020, and the results of its operations and its cash flows for the years 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 audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits 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 audits 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 audits 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 audits 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 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 are no critical audit matters.

[Signature]

/s/ Baker Tilly US, LLP (formerly known

We have served as Baker Tilly Virchow Krause, LLP)the Company's auditor since 2019.

Uniondale, NY

March 16, 2022

STATEMENTS OF INCOME

See Notes to Financial Statements

BALANCE SHEETS

ASSETS

See Notes to Financial Statements

BALANCE SHEETS

LIABILITIES AND STOCKHOLDERS' EQUITY

BALANCE SHEETS

ASSETS

See Notes to Financial Statements

STATEMENTS OF STOCKHOLDERS' EQUITY

Years ended December 31, 2020 and 2019

See Notes to Financial Statements