UNITED GUARDIAN INC
For the period ended Jun 30, 2024. Filed Aug 12, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 12, 2024
UG$6.71-1.3%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-13.
0001171843-24-002786
Item 2. - Management's Discussion and Analysis of Financial Condition and Result of Operations 15-19Current report: 10-Q
Period ended 2024-06-30; filed 2024-08-12.
0001171843-24-004675
Item 2. - Management's Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 47 previous paragraphs and 67 current paragraphs.
20 unchanged; 21 reworded; 25 added; 5 removed; 1 previous and 1 current paragraphs rearranged.
Tables are not compared: 4 previous and 0 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (25)
Current report
16 of 22
Current report
Net sales for the second quarter of 2024 increased by $739,906 (28%) when compared with the same period in 2023. Net sales for the first half of 2024 increased by $1,424,526 (27%) as compared with the corresponding period in 2023. The increase in sales for the second quarter of 2024 and the first half of 2024 were attributable to changes in sales of the following product lines:
Current report
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Current report
Cosmetic ingredients**:**
Current report
(a) Second quarter sales: For the second quarter of 2024, the Company’s sales of cosmetic ingredients increased by $646,487 (84%) when compared with the second quarter of 2023. The increase was due primarily to a net increase of $775,682 (59%) in sales of the Company’s cosmetic ingredients to ASI when compared with the second quarter of 2023. Based on information provided by ASI, the increase in sales was due to two main factors 1) increased demand for the Company’s Lubrajel products in China and 2) the lessening of competition from lower-priced competitors, especially those from Asian producers.
Current report
Second quarter sales to the Company’s four other distributors, as well as two direct cosmetic ingredient customers, decreased by a net of $129,195 (128%) compared with the second quarter of 2023. The decrease was attributable to sales decreases of $138,439 to the Company’s distributors in the UK and France. These decreases were partially offset by an increase in sales of $9,244 to the Company’s distributors in Italy and Switzerland, as well as two direct customers.
Current report
(b) Six-month sales: For the first half of 2024 the Company’s sales of cosmetic ingredients increased by $1,761,068 (115%) when compared with the corresponding period in 2023. This increase was due primarily to a net increase in sales to ASI of $1,993,053 (65%) when compared with the first half of 2023. This increase was combined with a net decrease in sales of $231,985 to the Company’s four other distributors and two direct customers. Sales to the Company’s distributors in the United Kingdom, France and Switzerland decreased by $250,917 and sales to the Company’s distributor in Italy, combined with two direct customers, increased by $18,932.
Current report
Pharmaceuticals**:**
Current report
Because there are fees, rebates and allowances associated with sales of the Company’s two pharmaceutical products, Renacidin and Clorpactin WCS-90, discussion of the Company’s pharmaceutical sales includes references to bothgross sales (before fees, rebates, and allowances) andnet sales (after fees, rebates and allowances).
Current report
Gross sales of the Company’s pharmaceutical products for the three-month period ended June 30, 2024 increased by $51,888 (3%) compared to the corresponding period in 2023. The increase in gross sales was primarily due to an increase of $73,392 (5%) in gross sales of Renacidin due to customer’s restocking the product after sales were impacted by a short supply of Renacidin in the latter part of 2023 and the beginning of 2024. This increase in gross Renacidin sales for the quarter was offset by a decrease of $21,504 (13%) in gross sales of the Company’s other pharmaceutical product, Clorpactin WCS-90. The decrease in sales of Clorpactin WCS-90 was believed to be caused by normal fluctuations in customer ordering patterns.
Current report
For the six-month period ended June 30, 2024, gross pharmaceutical sales decreased by $320,960 (10%) compared with the corresponding period in 2023. This decrease was primarily due to the Company’s limited supply of Renacidin during the latter part of 2023 into early March 2024, which resulted in the Company only being able to partially fill many orders. During this period, gross sales of Renacidin decreased by $313,169 (13%). The Company began to fill complete orders of Renacidin towards the end of March 2024. This decrease was also accompanied by a decrease in gross sales of Clorpactin WCS-90 of $7,791 (2%), which was again attributable to normal fluctuations in ordering patterns.
Current report
Net sales of the Company’s pharmaceutical products for the three- and six-month periods ended June 30, 2024 saw a similar pattern, increasing by $37,063 (3%) for the three-month period and decreasing by $366,838 (13%) for the six-month period, with those decreases due primarily to the reasons noted above.
Current report
The difference between the change in net sales compared with the change in gross sales for these products is due to a combination of the change in gross sales of those products combined with changes in pharmaceutical sales allowances related to these products. Typically, these allowances have a direct relationship with the sales of the Company’s pharmaceutical products.
Current report
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Current report
Medical lubricants**:**
Current report
Sales of the Company’s medical lubricants for the three- and six-month periods ended June 30, 2024 increased by $74,655 (15%) and $81,763 (9%), respectively, compared with the same periods in 2023. The increase in sales for both the three- and six-month periods was primarily due to an increase in orders from one of the Company’s larger customers in India.
Current report
Industrial and other products:
Current report
Sales of the Company's industrial products, as well as other miscellaneous products, for the three- and six-month periods ended June 30, 2024, decreased by $18,299 and $51,467, respectively, when compared with the corresponding periods in 2023. The decrease in sales for both periods was due to the discontinuation of this product line after the second quarter of 2023.
Current report
Cost of sales as a percentage of net sales decreased to 46% in the second quarter of 2024 from 54% in the second quarter of 2023. For the first six months of 2024, cost of sales as a percentage of sales decreased to 47% compared with 48% for the first six months of 2023. The decreases in both periods were the result of the product sales mix in 2024 compared with the same periods in 2023. The Company’s cosmetic ingredient sales represented a larger percentage of the Company’s total sales for both the three- and six-month periods ended June 30, 2024 compared with the same periods in 2023. These products carry a higher gross margin than the Company’s pharmaceutical products and lower per unit overhead costs, which was the result of an increase in production of these products due to higher demand in 2024.
Current report
Operating expenses, consisting of selling and general and administrative expenses, increased by $28,684 (5%) and $79,603 (7%), respectively, for the three- and six-month periods ended June 30, 2024 compared with the equivalent periods in 2023. The increase in both periods was mainly due an increase in fees paid to the company’s Board of Directors and increases in payroll and payroll-related expenses.
Current report
Research and development expenses decreased by $17,069 (13%) and $41,046 (16%), respectively, for the three- and six-month periods ended June 30, 2024, compared with the equivalent periods in 2023. The decrease was primarily due to decreases in payroll and payroll-related expenses.
Current report
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Current report
Net cash used in investing activities was $657,533 in the first half of 2024. Net cash provided by investing activities was $4,800,208 for the first half of 2023. The decrease was due to the sale of the majority of the Company’s equity and fixed income mutual funds during the second quarter of 2023 in order to take advantage of the increase in interest rates. The proceeds from these sales were primarily reinvested in short-term U.S. Treasury Bills, which are included in cash and cash equivalents.
Current report
OFF BALANCE-SHEET ARRANGEMENTS
Removed paragraphs (5)
Previous report
Net sales for the first quarter of 2024 increased by $684,620 (approximately 27%) as compared with the first quarter of 2023. The increase in sales for the first quarter of 2024 was primarily attributable to an increase in sales of the Company’s cosmetic ingredients, which was partially offset by a decrease in sales of the Company’s pharmaceutical products. The changes in the Company’s sales by product line are as follows:
Previous report
Cost of sales as a percentage of net sales for the first quarter of 2024 increased to 48%, compared with 43% for the first quarter of 2023. The increase was due primarily to the increased per unit overhead costs associated with the sales in the first quarter of 2024. As a result of the decreased production in 2023, these units carried a higher per unit overhead cost, thereby increasing the Company’s cost of sales when these units were sold in the first quarter of 2024.
Previous report
Operating expenses, consisting of selling, general, and administrative expenses, increased by $50,919 (approximately 10%) for the first quarter of 2024 compared with the first quarter of 2023. The increase was mainly due to increases in Board of Directors fees, legal fees and employee bonuses.
Previous report
R&D expenses decreased by $23,977 (approximately 19%) for the first quarter of 2024 compared with the first quarter of 2023. The decrease was primarily due to a decrease in payroll and payroll-related expenses.
Previous report
Cash used in investing activities for the three months ended March 31, 2024 was $665,478 compared with $46,088 for the three months ended March 31, 2023. The increase was primarily due to an increase in purchases of marketable securities in the first quarter of 2024 compared with the first quarter of 2023.
Reworded paragraphs (21)
Previous wording
Statements made in this Form 10-Q which are not purely historical are forward-looking statements with respect to the goals, plans, objectives, intentions, expectations, financial condition, results of operations, future performance, and business of the Company. Forward-looking statements may be identified using such words as “believes,” “may,” “will,” “should,” “intends,” “plans,” “estimates,” or “anticipates” or other similar expressions.
Current wording
Statements made in this Form 10-Q which are not purely historical are forward-looking statements with respect to the goals, plans, objectives, intentions, expectations, financial condition, results of operations, future performance, and business of the Company. Forward-looking statements may be identified by the use of such words as “believes”, “may”, “will”, “should”, “intends”, “plans”, “estimates”, “anticipates”, or other similar expressions. Forward-looking statements involve inherent risks and uncertainties, and important factors (many of which are
Previous wording
Forward-looking statements involve inherent risks and uncertainties, and important factors (many of which are beyond our control) could cause actual results to differ materially from those set forth in the forward-looking statements. In addition to those specific risks and uncertainties set forth in the Company’s reports currently on file with the SEC, some other factors that may affect the future results of operations of the Company are: the development of products that may be superior to those of the Company; changes in the quality or composition of the Company’s products; lack of market acceptance of the Company’s products; the Company’s ability to develop new products; general economic or industry conditions; changes in intellectual property rights; changes in interest rates; new legislation or regulatory requirements; conditions of the securities markets; the Company’s ability to raise capital; changes in accounting principles, policies or guidelines; financial or political instability; acts of war or terrorism; and other economic, competitive, governmental, regulatory and technical factors that may affect the Company’s operations, products, services, and prices.
Current wording
15 of 22 beyond the Company’s control) could cause actual results to differ materially from those set forth in the forward-looking statements. In addition to those specific risks and uncertainties set forth in the Company's reports currently on file with the SEC, some other factors that may affect the future results of operations of the Company are: the development of products that may be superior to those of the Company; changes in the quality or composition of the Company's products; lack of market acceptance of the Company's products; the Company's ability to develop new products; general economic or industry conditions; changes in intellectual property rights; changes in interest rates; new legislation or regulatory requirements; conditions of the securities markets; the Company's ability to raise capital; changes in accounting principles, policies or guidelines; financial or political instability; acts of war or terrorism; and other economic, competitive, governmental, regulatory and technical factors that may affect the Company's operations, products, services and prices. Accordingly, results achieved may differ materially from those anticipated as a result of such forward-looking statements, and those statements speak only as of the date they are made.
Previous wording
The Company is a Delaware corporation that, through its Guardian Laboratories division, manufactures and markets cosmetic ingredients, pharmaceuticals, medical lubricants, and sexual wellness products. Prior to July 1, 2023, the Company manufactured and reported sales of a line of specialty industrial products; however, this product line was discontinued after the second quarter of 2023 due to low sales volume with no growth prospects. In October 2023, the Company entered into a distribution agreement with Brenntag Specialties, a global market leader in chemicals and ingredients distribution, for the distribution of the Company’s new line of sexual wellness ingredients, specifically called the “Natrajel™” line of products, in the United States, Canada, Mexico, Central America and South America. Although there were no sales of these products during 2023, the Company anticipates that it will begin manufacturing and reporting sales of this new line of products in 2024.
Current wording
The Company is a Delaware corporation that, through its Guardian Laboratories division, manufactures and markets cosmetic ingredients, pharmaceuticals, medical lubricants, and sexual wellness products. Prior to July 1, 2023, the Company manufactured and reported sales of a line of specialty industrial products; however, this product line was discontinued after the second quarter of 2023 due to low sales volume with no growth prospects. In October 2023, the Company entered into an agreement with Brenntag Specialties, a global market leader in chemicals and ingredients distribution, for the marketing of the Company’s new line of sexual wellness ingredients, specifically called the “Natrajel®” line of products, in the United States, Canada, Mexico, Central America and South America. Although there were no sales of these products during 2023, the Company anticipates that it will begin manufacturing and reporting sales of this new line of products in the second half of 2024.
Previous wording
The Company also conducts research and product development. The Company’s research and development department also modifies, refines, and expands the uses for existing products, with the goal of further developing the market for its products. The Company also develops new products using natural and environmentally friendly raw materials, which is a priority for many of the Company’s cosmetic customers. All the products that the Company markets, except for Renacidin, are produced at its facility in Hauppauge, New York. Renacidin, a urological product, is manufactured for the Company by an outside contract manufacturer.
Current wording
The Company also conducts research and product development. The Company’s research and development department also modifies, refines, and expands the uses for existing products, with the goal of further developing the market for its products. The Company also develops new products using natural and environmentally friendly raw materials, which is a priority for many of the Company’s cosmetic customers. All the products that the Company markets, except for Renacidin, are produced at its facility in Hauppauge, New York. Renacidin, a urological product, is manufactured and packaged for the Company by an outside contract manufacturer.
Previous wording
The Company’s most important product line is its Lubrajel® line of multifunctional water-based gel formulations, which are designed to provide sensory enhancement, lubrication, and texture to both personal care and medical products.
Current wording
The Company’s most important product line is its Lubrajel® line of multifunctional hydrogels, which are designed to provide sensory enhancement, lubrication, and texture to both personal care and medical products.
Previous wording
The Company’s medical lubricants, which consist of water-based gel formulations designed mainly to provide sensory enhancement and lubrication to medical device products, are sold directly to medical customers, or to contract manufacturers employed by these medical customers.
Current wording
The Company’s medical lubricants, which consist of multifunctional hydrogels designed mainly to provide sensory enhancement and lubrication to medical device products, are sold directly to medical customers, or to contract manufacturers employed by these medical customers.
Previous wording
The Company does have competition in the marketplace for some of its products, particularly its cosmetic ingredients, some of its pharmaceutical products and its medical lubricants. These competitive products are usually sold at a lower price than the Company’s products; however, they may not compare favorably to the level of performance and quality of our products.
Current wording
The Company does have competition in the marketplace for some of its products, particularly its cosmetic ingredients, some of its pharmaceutical products, and its medical lubricants. These competitive products are usually sold at a lower price than the Company’s products; however, they may not compare favorably to the level of performance and quality of the Company’s products.
Previous wording
In recent years, the Company has elected to rely on trade secret protection to protect our intellectual property for proprietary product formulations and manufacturing methods. The Company will file for patent protection in situations where the Company believes that relying on trade secret protection alone would not provide sufficient protection. The Company owns the Lubrajel®, Natrajel™, Renacidin®, and Clorpactin® trademarks.
Current wording
In recent years the Company has elected to rely on trade secret protection to protect its intellectual property for the proprietary product formulations and manufacturing methods. The Company will file for patent protection in situations where the Company believes that relying on trade secret protection alone would not provide sufficient protection. The Company owns the Lubrajel®, Natrajel®, Renacidin®, and Clorpactin® trademarks.
Previous wording
The following discussion and analysis covers material changes in the financial condition of the Company since the year ended December 31, 2023, and a comparison of the results of operations for the three months ended March 31, 2024 and March 31, 2023. This discussion and analysis should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023. All references in this quarterly report to “sales” or “Sales” shall mean Net Sales unless specified otherwise.
Current wording
The following discussion and analysis cover material changes in the financial condition of the Company since the year ended December 31, 2023, and a comparison of the results of operations for the three and six months ended June 30, 2024 and June 30, 2023. This discussion and analysis should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023. All references in this quarterly report to “sales” or “Sales” shall mean Net Sales unless specified otherwise.
Previous wording
Investment income increased by $50,441 (approximately 106%) for the first quarter of 2024 compared with the first quarter of 2023. The increase was primarily due to an increase in interest income from United States Treasury Bills during the first quarter of 2024 compared with the dividend income on the Company’s equity and fixed income mutual funds in the first quarter of 2023.
Current wording
Investment income increased by $45,057 (82%) for the second quarter of 2024 compared with the second quarter of 2023 and increased by $95,498 (93%) for the first half of 2024 compared with the same period in 2023. The increases in both periods were primarily due to an increase in interest income from investments in United States Treasury Bills compared with the dividend income on the Company’s equity and fixed income mutual funds recorded during the same periods in 2023.
Previous wording
This change in the makeup of the investment income was attributable to the Company repositioning its marketable securities portfolio in 2023. In the second quarter of 2023, the Company liquidated most of its holdings of equity and fixed income mutual funds. The Company then used the proceeds from these sales to take advantage of higher interest rates by purchasing U.S. Treasury Bills.
Current wording
This change in the makeup of the investment income was attributable to the Company repositioning its marketable securities portfolio late in the second quarter of 2023. During that time, the Company liquidated most of its holdings of equity and fixed income mutual funds. The Company then used the proceeds from these sales to take advantage of higher interest rates by purchasing U.S. Treasury Bills.
Previous wording
Net Gain on Marketable Securities
Current wording
Net (loss) gain on Marketable Securities
Previous wording
The net gain on marketable securities decreased from $72,701 for the quarter ended March 31, 2023, to $41,496 for the quarter ended March 31, 2024. The decrease was primarily due to the factors discussed above regarding the Company’s repositioning of its marketable securities portfolio. In the first quarter of 2023, the Company’s marketable securities’ portfolio was primarily invested in equity and fixed income mutual funds, and in the first quarter of 2024 these funds were invested primarily in U.S. Treasury Bills, which are considered cash equivalents and the carrying amount approximates fair value due to the short-term nature of the securities. The Company’s management and Board of Directors are continuing to closely monitor the Company's investment portfolio and have made and will continue to make any changes they believe may be necessary or appropriate to minimize the future impact on the Company’s financial position that the volatility of the global financial markets may have.
Current wording
The net (loss) gain on marketable securities decreased from a gain of $7,479 for the quarter ended June 30, 2023, to a loss of $9,501 for the quarter ended June 30, 2024. For the six-month periods ended June 30, 2024 and 2023, the net gain on marketable securities decreased from $80,180 to $31,995, respectively. These decreases were primarily due to the factors discussed above regarding the Company’s repositioning of its marketable securities portfolio. For a significant part of the first half of 2023, the Company’s marketable securities’ portfolio was primarily invested in equity and fixed income mutual funds, and in the first half of 2024, these funds were invested primarily in U.S. Treasury Bills, which are considered cash equivalents and the carrying amount approximates fair value due to the short-term nature of the securities. The Company’s management and Board of Directors are continuing to closely monitor the Company's investment portfolio and have made and will continue to make any changes they believe may be necessary or appropriate to minimize the future impact on the Company’s financial position that the volatility of the global financial markets may have.
Previous wording
The Company's effective income tax rate was approximately 21% for the first quarter of 2024 and 2023 and is expected to remain at 21% for the current fiscal year.
Current wording
The Company's effective income tax rate was 21% for the first half and second quarter of both 2024 and 2023. The Company’s tax rate is expected to remain at 21% for the current fiscal year.
Previous wording
Working capital decreased by $150,814 to $10,567,643 at March 31, 2024, down from $10,718,457 at December 31, 2023. The current ratio decreased to 6.7 to 1 at March 31, 2024, down from 8.0 to 1 at December 31, 2023. The decreases in working capital and the current ratio were primarily due to increases in accounts payable and accrued expenses.
Current wording
Working capital increased from $10,718,457 at December 31, 2023 to $11,429,499 at June 30, 2024, an increase of $711,042. The current ratio decreased from 8.0 to 1 at December 31, 2023 to 7.7 to 1 at June 30, 2024. The increase in working capital was primarily due to an increase in marketable securities and accounts receivable. The decrease in the current ratio was primarily due to an increase in accounts payable.
Previous wording
The Company believes that its working capital is, and will continue to be, sufficient to support its operating requirements for at least the next twelve months. The Company’s long-term liquidity position will be dependent on its ability to generate sufficient cash flow from profitable operations.
Current wording
The Company believes that its working capital is, and will continue to be, sufficient to support its operating requirements for at least the next twelve months. The Company intends to utilize its available cash and assets primarily for its continued organic growth and potential future strategic transactions, as well as to mitigate the potential impact of inflation on the Company's business.
Previous wording
The Company is in the process of upgrading its building sprinkler system and has incurred costs of $99,000 to date and expects to incur additional costs of $69,000 during 2024. The project is expected to be completed during the second quarter of 2024.
Current wording
The Company is in the process of upgrading its building sprinkler system and has incurred costs of $137,000 to date and expects to incur additional costs of $41,000 during the third quarter of 2024. The project is expected to be completed during the third quarter of 2024.
Previous wording
The Company generated cash from operations of $644,120 and $417,589 for the three months ended March 31, 2024 and 2023, respectively. The increase was due primarily to an increase in net income.
Current wording
The Company generated cash from operations of $1,968,250 and $852,247 for the first half of 2024 and 2023, respectively. The increase from 2023 to 2024 was primarily due to the increase in net income.
Previous wording
Net cash used in financing activities was $1,148,468 for the quarter ended March 31, 2024. There were no cash flows from financing for the first quarter of 2023. The increase in cash used in financing activities was due to the Company’s Board of Directors changing the Company’s dividend declaration practice in June of 2023. Under the new practice, the Company expects to consider a semi-annual dividend declaration in January and July of each year. On January 30, 2024, the Company’s Board of Directors declared a cash dividend of $0.25 per share, which was paid on February 20, 2024, to all stockholders of record as of February 12, 2024.
Current wording
Net cash used in financing activities was $1,148,468 for the first half of 2024. There were no cash flows from financing for the half of 2023. The increase in cash used in financing activities was due to the Company’s Board of Directors changing the Company’s dividend declaration practice in June of 2023. Under the new practice, the Company expects to consider a semi-annual dividend declaration in January and July of each year. On January 30, 2024, the Company’s Board of Directors declared a cash dividend of $0.25 per share, which was paid on February 20, 2024, to all stockholders of record as of February 12, 2024.
Previous wording
The Company expects to continue to use its cash to make dividend payments, purchase marketable securities, and take advantage of growth opportunities that may arise that are in the best interest of the Company and its shareholders.
Current wording
The Company expects to continue to use its cash to make dividend payments, purchase marketable securities, and take advantage of growth opportunities that are in the best interest of the Company and its shareholders.
Previous wording
The Company has no off 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.
Current wording
The Company has no off balance-sheet transactions that have, or are reasonably likely to have, a current or future impact on the Company’s financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
The following discussion and analysis cover material changes in the financial condition of the Company since the year ended December 31, 2023, and a comparison of the results of operations for the second quarter of 2024 and 2023 and the first half of 2024 and 2023. This discussion and analysis should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations included in the Company's Annual Report on Form 10-K for the year ended December 31, 2023. All references in this quarterly report to “sales” or “Sales” shall mean “net sales” unless specifically identified as “gross sales”.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
Accordingly, the results achieved may differ materially from those anticipated as a result of such forward-looking statements, and those statements speak only as of the date they are made.