What changed in this filing

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Item 9A. Controls and Procedures

2022-03-23 compared with 2021-03-22 · 835 added, 765 removed, 285 unchanged (85% of the section changed)

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.

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.

(b) Management’s

Report on Internal Control over Financial Reporting

Management is responsible

for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f).

The Company’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.

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.

this Annual Report contains only management’s report on internal controls.

in Internal Control over Financial Reporting

There were no changes

in the Company’s internal control over financial reporting in the fourth quarter of 2020 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.

(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, 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 ’

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, 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.

There were no changes in the Company’s internal control over financial reporting in the fourth quarter of 2021 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.

Other Information.

Directors, Executive Officers

and Corporate Governance.

The information required

by this item is incorporated by reference to the section entitled “Directors and Executive Officers”

to be contained

in the Company’s 2021 Proxy Statement.

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.

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Not applicable.

UNITED-GUARDIAN, INC.

Directors, Executive Officers and 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.

Name and Position

with the Company

Biographical Information

   President

   Principal Executive Officer

   General Counsel

   Chairman of the Board

President and General Counsel of the Company from July 1988 to date;

Chairman of the Board and Principal Executive Officer since September 2009;

Chief Financial Officer of the Company from November 1997 to December 2006.

   Senior Vice President

   Production Manager

Senior Vice President of the Company from April 2020 to date;

Vice President of the Company from July 2002 to April 2020;

Production Manager of the Company since 1982.

   Principal Financial Officer

   Controller;

   Secretary

Secretary of the Company from April 2020 to date;

Treasurer and Principal Financial Officer of the Company from May 2018 to date;

Controller of the Company from September 2016 to date;

Human Resources Manager of the Company from May 2017 to date.

Donna Vigilante

   Vice President

   R&D Manager

Vice President of the Company since May 2020;

Research and Development Manager of the Company since September 2017;

Research and Development chemist from November 2015 until September 2017.

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.

Name and Position

with the Company

Principal Occupation, Qualifications, and other Boards

Year First Elected a Director

   President

   Chief Executive Officer

   General Counsel

   Chairman of the Board

President and General Counsel of the Company since July 1988;

Chief Financial Officer of the Company from November 1997 to December 2006;

and Chairman of the Board since September 2009.

He has leadership experience, legal experience from his prior years as an attorney in private practice, business experience, and knowledge of the Company’s operations from over 38 years as General Counsel, Vice President, and then President of the Company.

He holds a bachelor’s degree in Psychology and English from the State University of New York at Albany, and a Juris Doctor degree from the George Washington University Law School.

   Director

Partner in the accounting firm of PKF O'Connor Davies, LLP, New York, NY since January 1, 2021;

partner in the accounting firm of Bonamassa, Maietta & Cartelli, LLP, Brooklyn, NY, from 1991 through December 2020;

and Controller of the Company from October 1991 to November 1997.

He has financial experience, business experience, and an extensive knowledge of the Company’s operations.

He has been a CPA and consultant preparing financial reports and tax returns for the Company and other clients for more than 35 years.

He holds a bachelor’s degree in Business Administration from Niagara University, and an MBA from Hofstra University.

   Director

Counsel to the law firm of Duane Morris LLP, New York, NY since August 2007.

He has leadership experience, legal experience, business experience, and a scientific education and background.

From 1998 to 2007 he was partner and previously “Of Counsel” to the law firm of Reed Smith, LLP, New York, NY.

For more than 20 years prior, he was employed by GAF Corporation and its subsidiary, International Specialty Products, Inc., Wayne, NJ, including having been Vice President of corporate development and general management for the last 8 of those years.

He holds a bachelor’s degree in Engineering from Stevens Institute of Technology, and a Juris Doctor degree from St.

John’s University School of Law.

   Director

Independent business consultant since 2001.

He has leadership experience, business experience, and a scientific education and background.

For more than 25 years he was employed by Kline & Company, Inc., Parsippany, NJ, an international business consulting and market research firm specializing in the chemicals industry, consumer products, life sciences, and energy, including having been President from 1990 to 2001.

He holds a bachelor's degree in Chemistry from Hofstra University, and an MBA from Seton Hall University.

Ari Papoulias

   Director

Principal of ChemRise LLC, a business advisory firm providing technology, marketing, and financial advice to firms in the chemicals industry, since 2016;

from 2006 to 2015 Global Marketing Director for Momentive Performance Materials (formerly GE Advanced materials);

from 1987 to 2006 initially Business Manager of Advanced Materials, then Business Director of Industrial Markets, and then Global Marketing Director of Performance Chemicals for International Specialty Products, Inc., Wayne, NJ.

He has leadership experience, business and financial experience, and a scientific background and education.

He holds a B.Sc.

in Chemical Engineering from the University of Massachusetts, an M.Sc.

in Chemical Engineering from the University of Florida, a Ph.D.

in Chemical Engineering from Carnegie Mellon University, and an MBA in Finance from New York University.

(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 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;

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.

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;

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 Board has a compensation committee which was formed in 1999 for the purpose of recommending to the Board the compensation of corporate officers and key employees for the ensuing year.

Members of the Compensation Committee are Messrs.

Maietta, Arthur M.

Dresner, and Andrew A.

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 Committee has engaged a consultant to provide advice on compensation.

The Compensation Committee does not set compensation of directors.

Instead, the full Board acts on recommendations made by the independent directors.

In its review of compensation of directors, the Board considers various factors, such as compensation of directors in other public companies of a similar size, the time spent by Board and Committee members in their service to the Company, and recent changes that may result in an increase or decrease in the responsibilities or time commitment of a Board and Committee member.

NOMINATING COMMITTEE

The Board does not have a Nominating Committee.

The full Board fulfills the role of a nominating committee.

Final selections are made by a majority of the independent directors.

Ken Globus is not independent as that term is defined by the listing standards of NASDAQ.

It is the position of the Board that it is appropriate for the Company not to have a separate nominating committee because the size, composition and collective independence of the Board enables it to adequately fulfill the functions of a standing committee.

NASDAQ does not require the Company to have a separate nominating committee but does require that Board nominees be selected by either a nominating committee composed solely of independent directors or by a majority of the independent directors.

The Board has not considered diversity in identifying nominees for director positions, but intends to do so in the 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.

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.

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.

Executive Compensation.

The information required

by this item is incorporated herein by reference to the section entitled "Compensation of Directors and Executive Officers"

in the Company's 2021 Proxy Statement.

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:

Name and position

Stock awards ($)

Option awards ($)

Non-equity incentive plan compen-sation

Non-qualified deferred compen-sation earnings

All other compen-sation (1)

   President

   Chief Executive Officer

   Chairman of the Board

Donna Vigilante

   Vice President

   R&D Manager

   Director of Technical

   Services

  Chief Financial Officer

   Controller, Treasurer,

   Secretary

   Senior Vice President

   Production Manager

In both 2021 and 2020 under the Company’s 401(k) plan for all its employees, the Company made a contribution of up to 4% of each employee’s salary, matching an employee’s elective deferral of up to 4% of salary.

In addition, in 2009 the Company began making a discretionary contribution to all employees’ 401(k) accounts based on a formula that qualifies the 401(k) plan under Internal Revenue Service (“IRS”) Safe Harbor provisions.

These amounts represent the Company's contribution for each year.

There are no other items included in these amounts.

2021 DIRECTOR COMPENSATION

The following table sets forth for the fiscal year ended December 31, 2021 certain information concerning the compensation paid to directors of the Company who are not “named executive officers”

(as such term is defined in Item 402(m)(2) of Regulation S-K):

UNITED-GUARDIAN, INC.

Security Ownership of Certain

Beneficial Owners and Management and Related Stockholder Matters.

The information required

by this item is incorporated by reference to the section entitled "Voting Securities and Principal Stockholders"

Company's 2021 Proxy Statement.

Certain Relationships

and Related Transactions, and Director Independence.

The information required

by this item is incorporated by reference to the section entitled “Directors and Executive Officers"

in the Company's

2021 Proxy Statement.

Principal Accounting

Fees and Services.

The aggregate fees

that have been billed by Baker Tilly US, LLP (“Baker Tilly“), the Company’s principal accountants since March

25, 2019, for the quarterly reviews of the Company’s financial statements for the first, second and third quarters of 2019

and the audit of the Company’s financial statements for the 2019 fiscal year were $89,000.

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 2020 and the audit of the Company’s financial statements for the 2020 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.

Audit-Related

During 2020, 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"

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

Fees earned or paid in

Option awards ($)

Non-Equity incentive

Nonqualified deferred compensation earnings

Ari Papoulias

Consulting fee paid to of PKF O'Connor Davies, LLP, New York, NY, of which Lawrence F.

Maietta is a partner, for work performed by Mr.

Maietta in connection with his review of the Company’s quarterly and annual financial statements and corporate tax returns.

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

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

The following table sets forth the shares of the Company's Common Stock, par value $.10 per share (the only class of stock issued and outstanding), owned beneficially by each person who, as of March 1, 2022, is known by the Company to have owned beneficially more than 5% of the outstanding Common Stock.

Regarding the shares referenced in footnote (1) below, the beneficial owner has both sole voting power and sole investment power, except for those shares held by his spouse as noted.

Name and Address of

Beneficial Owner

c/o United-Guardian, Inc.

230 Marcus Blvd., Hauppauge, NY 11788

1,318,053  (1)

Betsee Parker

Box 2198, Middleburg, VA 20118

Renaissance Technologies LLC

800 Third Avenue, New York, NY 10022

One Corporate Center, Rye, NY 10580

279,027 shares held directly in his own name, and another 1,039,026 shares held beneficially as follows:

760,000 shares as joint Trustee of the Alfred Globus Testamentary Trust, as to which he has sole voting rights and shared investment power, and 279,026 shares held by his wife.

As of March 8, 2022, based on information provided to the Company by a representative of Dr.

Betsee Parker.

Based on Schedule 13G/A filed by Renaissance Technologies LLC with the SEC on February 11, 2022

As of March 3, 2022, based on information provided to the Company by Gabelli.

Of this total, 38,000 shares are owned by Gabelli Funds, LLC;

70,511 shares by Teton Advisors, Inc.;

and 148,300 shares by GAMCO Asset Management Inc.

and GAMCO Investors, Inc.

Some of the shares of Common Stock beneficially owned by Mr.

Gabelli are also beneficially owned by certain of the other related entities.

However, none of such entities individually reported beneficial ownership of shares constituting more than 5% of the outstanding shares of Common Stock of the Company.

UNITED-GUARDIAN, INC.

SECURITY OWNERSHIP OF MANAGEMENT

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

Except as otherwise indicated, the beneficial owner has sole voting and investment power.

Name of Beneficial Owner

Amount and Nature of

Beneficial Ownership

Ari Papoulias

Donna Vigilante

     All Officers and directors as a group (8 persons)

279,027 shares held directly in his own name, and another 1,039,026 shares held beneficially as follows:

760,000 shares as joint Trustee of the Alfred Globus Testamentary Trust, as to which he has sole voting rights and shared investment power, and 279,026 shares held by his wife.

Less than one percent (1%)

Certain Relationships and Related Transactions, and Director Independence.

RELATED PARTY TRANSACTIONS

The Company has adopted a written policy for the approval of "related party" transactions.

Under the policy, related parties are defined to include executive officers and directors of the Company and their immediate family members, a stockholder owning in excess of 5% of the Company, and entities in which any of the foregoing have a substantial ownership interest or control.

The policy applies to any transactions that exceed or are expected to exceed $50,000 in a single calendar year.

The policy provides that the Audit Committee will review transactions subject to the policy and decide whether or not to approve or ratify those transactions.

In doing so, the Audit Committee will make a determination as to whether the transaction is in the best interests of the Company and its stockholders, taking into account (a) the benefits to the Company and its stockholders;

(b) the extent of the related person’s interest in the transaction;

(c) whether the transaction is on terms generally available to an unaffiliated third-party under the same or similar circumstances;

(d) the impact or potential impact on a director’s independence in the event the related party is a director, an immediate family member of a director, or an entity in which a director is a partner, shareholder or executive officer;

and (e) the terms of each transaction.

The policy also provides that director and officer compensation that is approved by the Board or the Compensation Committee is exempt from this approval process and will be considered to be pre-approved.

The Related Party Transaction Policy can be found on the Company's web site at www.u-g.com.

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

UNITED-GUARDIAN, INC.

Principal Accounting Fees and Services.

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

The aggregate fees that have been, or are expected to be, billed by Baker Tilly for the quarterly reviews of the Company’s financial statements for the first, second and third quarters of 2021 and the audit of the Company’s financial statements for the 2021 fiscal year are $90,500.

Audit-Related Fees

During 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.

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 2020 or 2019.

There were no other non-audit-related fees billed to the Company by Baker Tilly in 2021 or 2020.

Pre-Approval Policies and Procedures

Engagement of accounting services by the Company is not made pursuant to any pre-approval policies and procedures.

Rather, the Company believes that its accounting firm is independent because all of its engagements by the Company are approved by the Company's Audit Committee prior to any such engagement.

The Audit Committee meets periodically to review and approve the scope of the services to be provided to the Company by its Independent Registered Public Accounting Firm, as well as to review and discuss any issues that may arise during an engagement.

The Committee is responsible for the prior approval of every engagement of the Company's Independent Registered Public Accounting Firm to perform audit and permissible non-audit services for the Company, such as quarterly financial reviews, tax matters, and consultation on new accounting and disclosure standards.

Before the auditors are engaged to provide those services, the President and the Chief Financial Officer will make a recommendation to the Committee regarding each of the services to be performed, including the fees to be charged for such services.

At the request of the Committee, the Independent Registered Public Accounting Firm and/or management shall periodically report to the Committee regarding the extent of services being provided by the Independent Registered Public Accounting Firm, and the fees for the services performed to date.

UNITED-GUARDIAN, INC.

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 Controller 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.

Exhibits, Financial Statement Schedules.

Documents filed as part of this report.

Financial Statements - see Item 8.

   Documents filed as part of this report.

Financial Statements - see Item 8.

Financial Statements and Supplementary Data.

Financial Statement Schedules –

Financial Statement Schedules – None.

(Financial statement schedules have been omitted either because they are not applicable, not required, or the information required to be set forth therein is included in the financial statements or notes thereto.)

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Notes to Financial Statements.

The exhibits listed on the accompanying Exhibit Index are filed as part of this Annual Report.

   Exhibits

   The exhibits listed on the accompanying Exhibit Index are filed as part of this Annual Report.

Form 10-K Summary.

UNITED-GUARDIAN, INC.

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.

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.

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President and Director

Pursuant to the requirements of the Securities

Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities

and on the dates indicated.

UNITED-GUARDIAN, INC.

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.

/s/ Ken Globus

       Ken Globus

President (Principal Executive Officer);

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March 16, 2022

/s/ Andrea J.

       Andrea J.

Chief Financial Officer (Controller, Principal Financial Officer, and Principal Accounting Officer);

3 unchanged sentences

March 16, 2022

        Lawrence F.

/s/ Arthur M.

1 unchanged sentence

March 16, 2022

       Arthur M.

Dresner  

/s/ Andrew A.

1 unchanged sentence

March 16, 2022

        Andrew A.

Boccone  

Ari Papoulias

1 unchanged sentence

March 16, 2022

Ari Papoulias

UNITED-GUARDIAN, INC.

EXHIBIT INDEX

Exhibit # Description

of Merger of United-Guardian, Inc.

Certificate of Merger of United-Guardian, Inc.

(New York) with and into United-Guardian, Inc.

(Delaware) as filed with the

Secretary of State of the State of Delaware on September 10, 1987.

Incorporated by reference to Exhibit 3(b) of the Registrant's

Annual Report on Form 10-K for the fiscal year ended February 29, 1988 (the "1988 10-K").

Certificate of Incorporation

of the Company as filed April 22, 1987.

Incorporated by reference to Exhibit 4.1 of the Registrant's Current Report on Form

8-K, dated September 21, 1987 (the "1987 8-K").

of the Company.

(Delaware) as filed with the Secretary of State of the State of Delaware on September 10, 1987.

Incorporated by reference to Exhibit 3(b) of the Registrant's Annual Report on Form 10-K for the fiscal year ended February 29, 1988 (the "1988 10-K").  

(a)  

Certificate of Incorporation of the Company as filed April 22, 1987.

Incorporated by reference to Exhibit 4.1 of the Registrant's Current Report on Form 8-K, dated September 21, 1987 (the "1987 8-K").

(b)     

By-laws of the Company.

Incorporated by reference to Exhibit 4.2 to the 1987 8-K.

Certificate for shares of Common Stock of the Company.

Specimen Certificate for shares of Common Stock of the Company.

Incorporated by reference to Exhibit 4(a) to the 1988 10-K.

Qualified Retirement Income Plan for Employees

of the Company, as restated April 1, 1976.

Incorporated by reference to Exhibit 11(c) of the Registrant's Registration

Statement on Form S-1 (Registration No.

(a)  

Qualified Retirement Income Plan for Employees of the Company, as restated April 1, 1976.

Incorporated by reference to Exhibit 11(c) of the Registrant's Registration Statement on Form S-1 (Registration No.

2-63114) declared effective February 9, 1979.

Exclusive Distributor Agreement between the Company and ISP Technologies Inc., dated July 5, 2000.

Indicates a paper filing

UNITED-GUARDIAN, INC.

Exclusive Distributor Agreement between the Company and ISP Technologies Inc. dated July 5, 2000.

Incorporated by reference to Exhibit 10(d) of the Registrant's Annual Report on Form 10-KSB for the fiscal year ended December 31, 2000.

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signed November 12, 2013 and effective as of November 1, 2013.

Incorporated by reference to Exhibit 10.1 of the Registrant’s Current Report on Form 8-K dated and filed November 18, 2013.

of Ethics and amendments thereto.

Incorporated by reference to Exhibit 14 of the Registrant's Annual Report on Form 10-K for

the fiscal year ended December 31, 2019.

of the Company:

UNITED-GUARDIAN, INC.

Incorporated by reference to Exhibit 10.1 of the Registrant’s Current Report on Form 8-K dated and filed November 18, 2013.

Code of Ethics and amendments thereto.

Incorporated by reference to Exhibit 14 of the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 2019.

Subsidiaries of the Company:

Certification of Ken Globus, President and Principal Executive Officer of the Company, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Certification

Certification of Andrea J.

Young, Principal Financial Officer of the Company, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

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Young, Principal Financial Officer of the Company, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Indicates a paper filing

Inline XBRL Instance Document –

The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the inline XBRL document.

Inline XBRL Taxonomy Extension Schema Document.

Inline XBRL Taxonomy Extension Calculation Linkbase Document.

Inline XBRL Taxonomy Extension Definition Linkbase Document.

Inline XBRL Taxonomy Extension Label Linkbase Document.

Inline XBRL Taxonomy Extension Presentation Linkbase Document.

Cover Page Interactive Data File (Embedded within the inline XBRL document and included in Exhibit 101.1).

* Filed herewith

UNITED-GUARDIAN, INC.

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December 31, 2021 and 2020)

Reports of Independent Registered Public Accounting Firm

Financial Statements

Report of Baker Tilly U.S.

LLP, Independent Registered Public Accounting Firm (PCAOB ID 23 )

F-1  & F-2

Financial Statements  

Statements of Income

Balance Sheets

F-4  & F-5

Statements of Stockholders' Equity

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Notes to Financial Statements

UNITED-GUARDIAN, INC.

F-8  - F-21

REPORT OF INDEPENDENT REGISTERED

PUBLIC ACCOUNTING FIRM

To the shareholders and the board of directors of United-Guardian,

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,

(the "Company") as of December 31, 2020 and 2019, 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").

opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December

31, 2020 and 2019, 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.

We have audited the accompanying balance sheets of United-Guardian, Inc.

(the "Company") as of December 31, 2021 and 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, 2021 and 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

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.

We conducted our audits in accordance with the standards of

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.

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

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial

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.

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.

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.

Baker Tilly US, LLP (formerly known as Baker Tilly Virchow Krause,

/s/ Baker Tilly US, LLP

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

Uniondale, NY

March 16, 2022

UNITED-GUARDIAN, INC.

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Years ended December 31,

$ 13,929,629  

$ 10,986,081  

Costs and expenses:

Cost of sales

5,747,931  

4,872,335  

Operating expenses

2,035,970  

2,026,368  

Research and development

costs and expenses

478,642  

451,208  

Total costs and expenses

8,262,543  

7,349,911  

Income from operations

5,667,086  

3,636,170  

Other income:

Investment income

Net gain on marketable securities

233,857  

226,245  

Net (loss) gain on marketable securities

( 23,018 )  

298,585  

Total other income

210,839  

524,830  

Income before provision for income taxes

5,877,925  

4,161,000  

Provision for income taxes

1,219,383  

856,022  

$ 4,658,542  

$ 3,304,978  

Earnings per common share (basic and diluted)

$ 1.01  

$ 0.72  

Weighted average shares (basic and diluted)

See Notes to Financial

4,594,319  

See Notes to Financial Statements

UNITED-GUARDIAN, INC.

BALANCE SHEETS

Current assets:

Cash and cash equivalents

$ 531,213  

$ 591,444  

Marketable securities

7,635,463  

7,591,381  

Accounts receivable, net of allowance for doubtful accounts of $ 20,252 in 2021 and $ 14,017 in 2020

1,813,346  

1,387,698  

Inventories (net)

1,410,789  

1,415,773  

Prepaid expenses and other current assets

192,579  

161,208  

Prepaid income taxes

99,107  

Total current assets

11,583,390  

11,246,611  

Property, plant, and equipment:

69,000  

Factory equipment and fixtures

4,605,742  

4,516,335  

Building and improvements

2,853,718  

2,848,585  

Total property, plant and equipment

7,528,460  

7,433,920  

Less accumulated depreciation

6,869,598  

6,760,255  

Total property, plant, and equipment, net

Other assets (net)

658,862  

673,665  

$ 12,242,252  

$ 11,920,276  

See Notes to Financial Statements

UNITED-GUARDIAN, INC.

BALANCE SHEETS

LIABILITIES AND STOCKHOLDERS' EQUITY

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Accounts payable

$ 410,894  

$ 31,800  

Accrued expenses

1,627,390  

1,363,457  

Deferred revenue

190,164  

Income taxes payable

88,738  

Dividends payable

20,575  

19,028  

Total current liabilities

2,337,761  

1,414,285  

Deferred income taxes (net)

83,222  

151,684  

Commitments and contingencies

Stockholders’

Common stock, $ .10 par value;

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4,594,319 shares issued and outstanding at December 31, 2021 and 2020, respectively

459,432  

Retained earnings

Total stockholders’

TOTAL LIABILITIES AND STOCKHOLDERS’

9,361,837  

9,894,875  

Total stockholders ’

9,821,269  

10,354,307  

TOTAL LIABILITIES AND STOCKHOLDERS ’

$ 12,242,252  

$ 11,920,276  

See Notes to Financial Statements

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Years ended December 31, 2021 and 2020

Common stock  

Amount  

Balance, January 1, 2020

4,594,319  

$ 459,432  

$ 10,173,466  

$ 10,632,898  

3,304,978  

Dividends declared, not paid ($ .78 per share)

Dividends declared and paid ($ .78 per share)

( 3,582,431 )

Balance, December 31, 2020

4,594,319  

$ 459,432  

$ 9,894,875  

$ 10,354,307  

4,658,542  

Dividends declared, not paid ($ 1.13 per share)

Dividends declared and paid ($ 1.13 per share)

( 5,190,033 )  

Balance, December 31, 2021

4,594,319  

$ 459,432  

$ 9,361,837  

$ 9,821,269  

See Notes to Financial Statements

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Depreciation and amortization

Net gain on marketable securities

Gain on sale of asset

Net loss (gain) on marketable securities

Allowance for doubtful accounts

Reserve for inventories

Deferred income taxes

Decrease (increase) in operating assets:

(Increase) decrease in operating assets:

Accounts receivable

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Prepaid income taxes

(Decrease) increase in operating liabilities:

Increase (decrease) in operating liabilities:

Accounts payable

Accrued expenses

Deferred revenue

Income taxes payable

Dividends payable

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Purchases of marketable securities

(14,779,161 )

Proceeds from sales of marketable securities

Net cash (used in) provided by investing activities

Net cash used in investing activities

Cash flows from financing activities:

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Net cash used in financing activities

Net (decrease) increase in cash and cash equivalents

Net decrease in cash and cash equivalents

Cash and cash equivalents, beginning of year

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Supplemental disclosure of cash flow information

Supplemental disclosure of non-cash dividends on unexchanged shares

Supplemental disclosure of non-cash items:

Dividends payable

Trade-in received from sale of asset

See Notes to Financial Statements

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United-Guardian, Inc.

(the "Company") is a Delaware corporation that, through its Guardian Laboratories division, manufactures and markets

cosmetic ingredients, pharmaceuticals, medical lubricants, and 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 for existing products, with the goal of further developing the market for

the Company's products.

Two major product lines, Lubrajel ®

and Renacidin ®

Irrigation Solution (“Renacidin”)

together accounted for approximately 92% and 93% of the Company’s sales for the years ended December 31, 2020 and December

31, 2019, respectively.

Lubrajel accounted for approximately 57% and 67% of the Company’s sales for the years ended December

31, 2020 and December 31, 2019, respectively, and Renacidin accounted for approximately 36% and 26% of the Company’s sales

for the years ended December 31, 2020 and December 31, 2019, respectively.

(the "Company") is a Delaware corporation that, through its Guardian Laboratories division, manufactures and markets cosmetic ingredients, pharmaceuticals, medical lubricants, and 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 for existing products, with the goal of further developing the market for the Company's products.

Two major product lines, Lubrajel®

and Renacidin®

Irrigation Solution (“Renacidin”) together accounted for approximately 93 % and 92 % of the Company’s sales for the years ended December 31, 2021 and December 31, 2020, respectively.

Lubrajel accounted for approximately 64 % and 57 % of the Company’s sales for the years ended December 31, 2021 and December 31, 2020, respectively, and Renacidin accounted for approximately 29 % and 36 % of the Company’s sales for the years ended December 31, 2021 and December 31, 2020, respectively.

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

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 of the Company’s cosmetic ingredients and

medical products have been significantly impacted, particularly in the second half of 2020.

Sales of the Company’s cosmetic

ingredients in 2020 decreased by 33% compared with 2019.

The decrease was primarily the result of lower sales to Ashland Specialty

Ingredients (“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

(b) manufacturing disruptions in China resulting from the impact of the coronavirus on manufacturing facilities;

excess inventory levels due to overstocking on the part of both the Company’s marketing partner for China as well its sub-distributors

The overstocking was due to the uncertainty on the part of the marketing partner about being able to continue to get

product from the Company during the pandemic.

Since the Company’s

cosmetic ingredients are marketed in many different countries, it is difficult to project the future impact of the coronavirus

pandemic on the Company’s global cosmetic ingredient sales, since 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

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

UNITED-GUARDIAN, INC.

The Company also believes

that the coronavirus impacted sales to two of the Company’s four 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

With the continuing

uncertainty as to what the duration and future impact of the pandemic will be, the Company is unable to provide an accurate estimate

or projection as to what the continuing impact of the coronavirus will be on the Company’s 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 protection from large price fluctuations

on its most important raw material, and has multiple sources for many of its other raw materials.

Even with the impact of the coronavirus

pandemic it has been able to maintain sufficient inventory and production levels to enable it to fulfill sales orders on a timely

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 been more difficult to ship the Company’s products due to a shortage of truck drivers and trucks, which has meant some delays on having orders picked up, even though the Company’s products are available to ship.

The shortage of truck drivers and trucks is expected to continue in 2022.

The Company is minimizing the impact on customers by making them aware of the longer lead times that may be needed due to the trucking issue.

Sales of the Company’s non-pharmaceutical medical products (“medical products”) had also been negatively impacted by the pandemic in 2020, but those impacts lessened as well in 2021.

Sales of the Company’s pharmaceutical products were not impacted by the pandemic in 2020 or in 2021.

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

The Company has been able to maintain production throughout the pandemic.

There continues to be uncertainty in regard to the future impact of the pandemic on the Company’s operations or financial results.

While the impact on the Company’s’

sales lessened considerably in 2021, the Company is still unable to provide an accurate estimate or projection as to what the future impact of the pandemic will be on the Company’s future operations or financial results.

The Company does not expect the carrying value of its assets or its liquidity to be impaired by the coronavirus pandemic.

UNITED-GUARDIAN, INC.

Use of Estimates

In preparing financial

statements in conformity with a Generally Accepted Accounting Principles in the United States of America (“US GAAP”),

management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure

of contingent assets and liabilities at the date of the financial statements and revenue and expenses during the reporting period.

In preparing financial statements in conformity with a Generally Accepted Accounting Principles in the United States of America (“US GAAP”), management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenue and expenses during the reporting period.

Actual results could differ from those estimates.

Such estimated items include the allowance for bad debts, reserve for inventory

obsolescence, accrued distribution fees, outdated material returns, possible impairment of marketable securities and the allocation

Such estimated items include the allowance for bad debts, reserve for inventory obsolescence, accrued distribution fees, outdated material returns, possible impairment of marketable securities and the allocation of overhead.

Accounts Receivable and Reserves

The carrying amount

of accounts receivable is reduced by a valuation allowance that reflects the Company’s best estimate of the amounts that

will not be collected.

The reserve for accounts receivable comprises the allowance for doubtful accounts and sales returns.

addition to reviewing delinquent accounts receivable, the Company considers many factors in estimating this reserve, including

historical data, experience, customer types and credit worthiness, and economic trends.

At December 31, 2020 and 2019, the allowance

for doubtful accounts receivable amounted to $14,017 and $21,178, respectively.

From time to time, the Company adjusts its

assumptions for anticipated changes in any of these or other factors expected to affect collectability.

The carrying amount of accounts receivable is reduced by a valuation allowance that reflects the Company’s best estimate of the amounts that will not be collected. The reserve for accounts receivable comprises the allowance for doubtful accounts. In addition to reviewing delinquent accounts receivable, the Company considers many factors in estimating this reserve, including historical data, experience, customer types and credit worthiness, and economic trends.

At December 31, 2021 and 2020, the allowance for doubtful accounts receivable amounted to $ 20,252 and $ 14,017 , respectively.

From time to time, the Company adjusts its assumptions for anticipated changes in any of these or other factors expected to affect collectability.

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 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 are estimated.

These deductions are recorded in the same period in which the revenue is recognized.

Such deductions, primarily related to the sale of the Company’s pharmaceutical products, include 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.

During 2021 and 2020, the Company participated in various government drug rebate programs related to the sale of Renacidin®, its most important pharmaceutical product.

These programs include the Veterans Affairs Federal Supply Schedule (FSS), and the Medicare Part D Coverage Gap Discount Program (CGDP).

These programs require the Company to sell its product at a discounted price.

In addition, during 2020, the Company also participated in the Medicaid Drug Rebate Program (MDRP), which required the Company to pay a significant rebate to the various states where Renacidin was provided to Medicaid patients, as well as the Section 340B Drug Pricing Program ( 340B ), which required the Company to sell their product at a deeply discounted price.

Due to the overly burdensome nature of the Medicaid rebates, and the deeply discounted pricing associated with the 340B Program, the Company terminated its participation in the MDRP and the 340B Programs, effective December 31, 2020.

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.

UNITED-GUARDIAN, INC.

The Company’s

sales, as reported, are subject to a variety of deductions, which are estimated and recorded in the same period that the revenues

are recognized.

Such variable consideration, primarily related to the sale of the Company’s pharmaceutical products, includes

chargebacks from the United States Department of Veterans Affairs (“VA”), rebates in connection with participation

in Medicare and 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.

During 2020 and 2019,

the Company participated in various government drug rebate programs related to the sale of Renacidin, its most important pharmaceutical

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 required the Company

to either sell its product at a discounted price, or, in the case of Medicaid, to pay a significant rebate to the various states

where Renacidin is provided to Medicaid patients.

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, the Company concluded 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 as of

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 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;

As a result of the overly burdensome nature of the Medicaid rebates, the Company concluded 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 as of 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 (but not more than one

year after their expiration date, which is a return policy which conforms to standard pharmaceutical industry practice).

estimates an allowance for outdated material returns based on previous years’

or (d) the product has expired (but it is not more than one year after the expiration date).

This return policy conforms to standard pharmaceutical industry 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.

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 the Covid-19 pandemic the Company

experienced minor delays in receiving payments from certain customers that were impacted by the pandemic, but 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, 2020 and December

31, 2019, the allowance for doubtful accounts receivable was $14,017 and $21,178, 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

UNITED-GUARDIAN, INC.

The Company has distribution

agreements with certain distributors of its pharmaceutical products that entitles those distributors to distribution and services-related

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.

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.

At December 31, 2021 and 2020, the Company had an allowance of $ 313,904 and $ 302,715 respectively, for possible outdated material returns, which is included in accrued expenses.

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.

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.

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.

At December 31, 2021, the Company recorded an advance payment from one of its customers in the amount of $ 190,164 , which is included within the deferred revenue on the balance sheet.

The related performance obligation associated with this payment had not been satisfied as of the balance sheet date and is expected to be fulfilled within the first two quarters of 2022.

The Company has distribution agreements with certain distributors of its pharmaceutical products that entitles those distributors to distribution and services-related fees.

The Company records distribution fees, and estimates of distribution fees, as offsets to revenue.

Disaggregated net sales

by product class is as follows:

UNITED-GUARDIAN, INC.

Disaggregated net sales by product class is as follows:

Years ended December 31,

Cosmetic ingredients

$ 6,872,714  

$ 4,274,586  

Pharmaceuticals

4,735,324  

4,519,052  

Medical products

2,171,204  

2,052,961  

Industrial and other

150,387  

139,482  

Total Net Sales

The Company’s

cosmetic ingredients are currently marketed worldwide by five marketing partners, of which United States (“U.S.”)-based

ASI purchases the largest volume.

During most of 2019 the Company also had a separate marketing partner for Korea, but at the end

of 2019 that territory was transferred to ASI.

For the years ended December 31, 2020 and 2019, approximately 20% and 18%, respectively,

of the Company’s sales were to (a) its foreign-based marketing partners (which does not include ASI), which marketed and

distributed the Company’s cosmetic ingredients to customers outside the U.S, and (b) a few foreign customers for the Company’s

medical products.

Disaggregated sales

by geographic region are as follows:

$ 13,929,629  

$ 10,986,081  

The Company’s cosmetic ingredients are currently marketed worldwide by five marketing partners, of which United States (“U.S.”)-based ASI purchases the largest volume.

For the years ended December 31, 2021 and 2020, approximately 20 % of the Company’s sales were to (a) its foreign-based marketing partners (which does not include ASI), which marketed and distributed the Company’s cosmetic ingredients to customers outside the U.S, and (b) a few foreign customers for the Company’s medical products.

Disaggregated sales by geographic region are as follows:

Years ended December 31,

United States*

$ 11,159,341  

$ 8,796,221  

Other countries

* Although a significant

percentage of ASI’s purchases from the Company are sold to foreign customers, all sales to ASI are considered U.S.

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% of ASI’s sales in 2020 were to customers in foreign countries, compared to 75% in 2019.

ASI’s largest foreign

market in both 2020 and 2019 was China, which accounted for approximately 33% of ASI’s sales in 2020 and 49% of sales in

UNITED-GUARDIAN, INC.

2,770,288  

2,189,860  

$ 13,929,629  

$ 10,986,081  

* 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, 74 % of ASI’s sales in 2021 were to customers in foreign countries, compared to 68 % in 2020.

ASI’s largest foreign market in both 2021 and 2020 was China, which accounted for approximately 41 % of ASI’s sales in 2021 and 34 % of sales in 2020.

Cash and Cash Equivalents

For financial statement

purposes, the Company considers as cash equivalents all highly liquid investments with an original maturity of three months or

less at the time of purchase.

The Company deposits cash and cash equivalents with high credit quality financial institutions and

believes that any amounts in excess of insurance limitations to be at minimal risk.

Cash and cash equivalents held in these accounts

are currently insured by the Federal Deposit Insurance Corporation (“FDIC”) up to a maximum of $250,000.

31, 2020, approximately $653,000 exceeded the FDIC limit.

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.

the Company declared a total of $3,583,569 in dividends, of which $3,582,431 was paid.

The balance of $1,138 is payable to stockholders

whose old Guardian shares have not yet been exchanged to United-Guardian, Inc.

For financial statement purposes, the Company considers as cash equivalents all highly liquid investments with an original maturity of three months or less at the time of purchase.

The Company deposits cash and cash equivalents with high credit quality financial institutions and believes that any amounts in excess of insurance limitations to be at minimal risk.

Cash and cash equivalents held in these accounts are currently insured by the Federal Deposit Insurance Corporation (“FDIC”) up to a maximum of $250,000.

At December 31, 2021, approximately $ 410,000 exceeded the FDIC limit.

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.

In 2021, the Company declared a total of $ 5,191,580 in dividends, of which $ 5,190,033 was paid.

The balance of $ 1,547 is payable to stockholders whose old Guardian shares have not yet been exchanged to United-Guardian, Inc.

shares and are pending escheatment.

See Note H for

further discussion.

During the third quarter

of 2020, the Company paid approximately $124,041 to its transfer agent, which represented accrued dividends on unconverted Guardian

This payment was made to facilitate the conversion of those shares to United-Guardian, Inc.

shares, and the subsequent

escheatment of those shares to the appropriate state jurisdictions.

The Company is continuing to accrue dividends on the remaining

unconverted shares that are currently pending escheatment.

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.

2019, the Company declared a total of $5,053,751 in dividends, of which $5,049,922 was paid.

The balance of $3,829 was payable

to stockholders whose Guardian shares have not been exchanged to United-Guardian, Inc.

UNITED-GUARDIAN, INC.

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.

In 2020, the Company declared a total of $ 3,583,569 in dividends, of which $ 3,582,431 was paid.

The balance of $ 1,138 is payable to stockholders whose old Guardian shares have not yet been exchanged to United-Guardian, Inc.

shares and are pending escheatment.

Note H for further discussion.

Marketable Securities

The Company’s

marketable securities include investments in equity and fixed income mutual funds and U.S.

Government securities.

The Company’s

marketable equity securities are reported at fair value with the related unrealized and realized gains and losses included in net

U.S Treasury Bills are considered debt securities and realized gains or losses, if any, are reported in other comprehensive

The Company’s marketable securities include investments in equity and fixed income mutual 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.

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 would record an impairment charge

to the extent that the cost of the available-for-sale securities exceeds the estimated fair value of the securities and the decline

in value is determined to be other-than-temporary.

During 2020 and 2019, 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.

Inventories are valued

at the lower of cost and net realizable value.

Cost is determined using the average cost method, which approximates cost determined

by the first-in, first-out (“FIFO”) method.

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 would record an impairment charge to the extent that the cost of the available-for-sale securities exceeds the estimated fair value of the securities and the decline in value is determined to be other-than-temporary.

During 2021 and 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.

Inventories are valued at the lower of cost and net realizable value.

Cost is determined using the average cost method, which approximates cost determined by the first -in, first -out (“FIFO”) method.

Inventory costs include material, labor and factory overhead.

Property, Plant and Equipment

Property, plant and

equipment are carried at cost, less accumulated depreciation.

Major replacements and betterments are capitalized, while routine

maintenance and repairs are expensed as incurred.

Property, plant and equipment are carried at cost, less accumulated depreciation.

Major replacements and betterments are capitalized, while routine maintenance and repairs are expensed as incurred.

Assets are depreciated under both accelerated and straight-line methods.

charged as a result of using accelerated methods was not materially different than that which would result from using the straight-line

method for all periods presented.

Certain factory equipment and fixtures are constructed by the Company using purchased materials

and in-house labor.

Depreciation charged as a result of using accelerated methods was not materially different than that which would result from using the straight-line method for all periods presented.

Certain factory equipment and fixtures are constructed by the Company using purchased materials and in-house labor.

Such assets are capitalized and depreciated on a basis consistent with the Company's purchased fixed assets.

Estimated useful lives

are as follows:

Estimated useful lives are as follows: 

Factory equipment and fixtures (years)

Building (years)

Building improvements

Lesser of useful life or 20 years

UNITED-GUARDIAN, INC.

Impairment of Long-Lived Assets

Long-lived assets and

certain identifiable intangibles are reviewed for impairment whenever events or changes in circumstances indicate that the carrying

amount of an asset may not be recoverable.

Recoverability of assets to be held and used is measured by a comparison of the carrying

amount of an asset to future net cash flows expected to be generated by the asset.

If such assets are considered to be impaired,

the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of

Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future net cash flows expected to be generated by the asset.

If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets.

Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell.

No impairments

were necessary at December 31, 2020 and 2019.

Other Assets (net)

Other assets at December

31, 2020 and 2019 represents an amount expended in connection with the development of the current single-dose form of Renacidin.

The Company began amortizing these costs in the first quarter of 2016.

At December 31, 2020 and 2019, accumulated amortization

for such assets amounted to $74,120 and $59,296, respectively.

No impairments were necessary at December 31, 2021 and 2020.

Fair Value of Financial Instruments

Management of the Company

believes that the fair value of financial instruments, consisting of cash and cash equivalents, accounts receivable, accounts payable,

and accrued expenses, approximates their carrying value due to their short payment terms and liquid nature.

Management of the Company believes that the fair value of financial instruments, consisting of cash and cash equivalents, accounts receivable, accounts payable, and accrued expenses, approximates their carrying value due to their short payment terms and liquid nature.

Concentration of Credit Risk

receivable potentially exposes the Company to concentrations of credit risk.

The Company monitors the amount of credit it allows

each of its customers, using the customer’s prior payment history to determine how much credit to allow or whether any credit

should be given at all.

It is the Company’s policy to discontinue shipments to any customer that is substantially past due

on its payments.

Accounts receivable potentially exposes the Company to concentrations of credit risk.

The Company monitors the amount of credit it allows each of its customers, using the customer’s prior payment history to determine how much credit to allow or whether any credit should be given at all.

It is the Company’s policy to discontinue shipments to any customer that is substantially past due on its payments.

The Company sometimes requires payment in advance from customers whose payment record is questionable.

of its monitoring of the outstanding credit allowed for each customer, as well as the fact that the majority of the Company’s

sales are to customers whose satisfactory credit and payment record has been established over a long period of time, the Company

believes that its accounts receivable credit risk has been reduced.

UNITED-GUARDIAN, INC.

For the year ended

December 31, 2020, four of the Company’s distributors and marketing partners accounted for approximately 72% of the Company’s

gross sales during the year and approximately 67% of its outstanding accounts receivable at December 31, 2020.

For the year ended

December 31, 2019, the same four distributors and marketing partners accounted for a total of approximately 70% of the Company’s

gross sales during the year and 70% of its outstanding accounts receivable at December 31, 2019.

As a result of its monitoring of the outstanding credit allowed for each customer, as well as the fact that the majority of the Company’s sales are to customers whose satisfactory credit and payment record has been established over a long period of time, the Company believes that its accounts receivable credit risk has been reduced.

For the year ended December 31, 2021, four of the Company’s distributors and marketing partners accounted for approximately 75 % of the Company’s gross sales during the year and approximately 80 % of its outstanding accounts receivable at December 31, 2021.

For the year ended December 31, 2020, the same four distributors and marketing partners accounted for a total of approximately 72 % of the Company’s gross sales during the year and 67 % of its outstanding accounts receivable at December 31, 2020.

Vendor Concentration

Most of the principal

raw materials used by the Company consist of common industrial organic and inorganic chemicals and are available in ample supply

from numerous sources.

However, there are some raw materials used by the Company that are not readily available or require long

The Company did not experience any issues obtaining raw materials from its main suppliers during the COVID-19 pandemic.

The Company has six major raw material vendors that collectively accounted for approximately 88% and 84% of the raw material purchases

by the Company in 2020 and 2019, respectively.

Income taxes are accounted

for under the asset and liability method.

Deferred tax assets and liabilities are recognized for future tax consequences attributable

to the temporary differences between the financial statement carrying amounts of assets and liabilities and their respective tax

bases and operating loss and tax credit carry forwards.

Deferred tax assets and liabilities are measured using enacted tax rates

expected to apply in the years in which those temporary differences are expected to be recovered or settled.

The effect on deferred

tax assets and liabilities of a change in tax rates is recognized in the period that includes the enactment date.

assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or

all the deferred tax assets will not be realized.

Uncertain tax positions

are accounted for utilizing a recognition threshold and measurement attribute for financial statement recognition and measurement

of a tax position taken or expected to be taken in a tax return.

As of December 31, 2020 and 2019, the Company did not have any

unrecognized income tax benefits.

It is the Company’s policy to recognize interest and penalties related to taxes as interest

expense as incurred.

During the years ended December 31, 2020 and 2019, the Company did not record any tax-related interest or

The Company’s tax returns for 2017 and all subsequent years are subject to examination by the United States Internal

Revenue Service and by the State of New York.

On December 18, 2019,

the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2019-12, “Simplifying

the Accounting for Income Taxes”, which modifies ASC 740 to simplify the accounting for income taxes.

The amendments in ASU

2019-12 are effective for fiscal years beginning after December 15, 2020.

The Company is currently evaluating whether any of the

modifications included in this pronouncement will impact its financial statements.

Most of the principal raw materials used by the Company consist of common industrial organic and inorganic chemicals and are available in ample supply from numerous sources.

However, there are some raw materials used by the Company that are not readily available or require long lead times.

The Company experienced a temporary supply issue related to one of its raw materials that was caused by a temporary disruption at the vendor’s manufacturing facility.

As a result, the Company located and is in the process of qualifying a second vendor for that material.

The company does not expect this issue to impact manufacturing of the product in which this raw material is used.

The Company has, however, experienced longer lead times due to shipping delays related to the pandemic.

The Company has six major raw material vendors that collectively accounted for approximately 94 % and 88 % of the raw material purchases by the Company in 2021 and 2020, respectively.

UNITED-GUARDIAN, INC.

Research and Development

Income taxes are accounted for under the asset and liability method.

Deferred tax assets and liabilities are recognized for future tax consequences attributable to the temporary differences between the financial statement carrying amounts of assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards.

Deferred tax assets and liabilities are measured using enacted tax rates expected to apply in the years in which those temporary differences are expected to be recovered or settled.

The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the period that includes the enactment date.

Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all the deferred tax assets will not be realized.

Uncertain tax positions are accounted for utilizing a recognition threshold and measurement attribute for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return.

As of December 31, 2021 and 2020, the Company did not have any unrecognized income tax benefits.

It is the Company’s policy to recognize interest and penalties related to taxes as interest expense as incurred.

During the years ended December 31, 2021 and 2020, the Company did not record any tax-related interest or penalties.

The Company’s tax returns for 2018 and all subsequent years are subject to examination by the United States Internal Revenue Service and by the State of New York.

Research and Development

expenses are expenditures incurred in connection with in-house research on new and existing products.

It includes payroll and payroll

related expenses, outside laboratory expenditures, lab supplies, and equipment depreciation.

Research and development expenses are expenditures incurred in connection with in-house research on new and existing products.

It includes payroll and payroll related expenses, outside laboratory expenditures, lab supplies, and equipment depreciation.

Shipping and Handling Expenses

Shipping and handling

costs are classified in operating expenses in the accompanying statements of income.

Shipping and handling costs were approximately

$81,000 and $76,000 for the years ended December 31, 2020 and 2019, respectively.

Shipping and handling costs are classified in operating expenses in the accompanying statements of income.

Shipping and handling costs were approximately $ 82,000 and $ 81,000 for the years ended December 31, 2021 and 2020, respectively.

Advertising Expenses

costs are expensed as incurred.

For the years ended December 31, 2020 and 2019, the Company incurred approximately $27,000 and

$28,000, respectively, in advertising expense , which primarily relates to the internet marketing

of Renacidin, one of the Company’s pharmaceutical products.

Advertising costs are expensed as incurred.

For the years ended December 31, 2021 and 2020, the Company incurred approximately $ 31,000 and $ 27,000 , respectively, in advertising expense, which primarily relates to the internet marketing of Renacidin, one of the Company’s pharmaceutical products.

Earnings Per Share Information

Basic earnings per

share are computed by dividing net income by the weighted average number of common shares outstanding during the year.

earnings per share would include the dilutive effect of outstanding stock options, if any.

Basic earnings per share are computed by dividing net income by the weighted average number of common shares outstanding during the year.

Diluted earnings per share would include the dilutive effect of outstanding stock options, if any.

New Accounting Standards

In January 2019, the

Company adopted ASU 2016-02, “Leases”, which was intended to improve financial reporting for lease transactions.

ASU requires organizations that lease assets, such as real estate and manufacturing equipment, to recognize both assets and liabilities

on their balance sheet for the rights to use those assets for the lease term and obligations to make the lease payments created

by those leases that have terms of greater than 12 months.

The recognition, measurement, and presentation of expenses and cash

flows arising from a lease by a lessee primarily will depend on its classification as a finance or operating lease.

This ASU requires

disclosures to help investors and other financial statement users better understand the amount and timing of cash flows arising

These disclosures include qualitative and quantitative requirements, providing additional information about the amounts

recorded in the financial statements.

The adoption of this standard did not have a material impact on the Company’s financial

On December 18, 2019,

the FASB issued ASU 2019-12, “Simplifying the Accounting for Income Taxes”, which modifies ASU 740 to simplify the

accounting for income taxes.

The amendments in ASU 2019-12 are effective for fiscal years beginning after December 15, 2020.

adoption is permitted.

The Company is currently evaluating if any of these modifications will have an impact on its financial statements.

In June 2016, the FASB

issued ASU-2016-13 “Financial Instruments –

Credit Losses”.

This guidance affects organizations that hold financial

assets and net investments in leases that are not accounted for at fair value with changes in fair value reported in net income.

The guidance requires organizations to measure all expected credit losses for financial instruments at the reporting date based

on historical experience, current conditions and reasonable and supportable forecasts.

It is effective for fiscal years beginning

after December 15, 2022.

The Company is currently evaluating if this pronouncement will have a potential impact on its financial

On January 1, 2021, the Company adopted Accounting Standards Update (ASU) 2019 - 12, “Simplifying the Accounting for Income Taxes.”

This standard modified ASU 740 and simplifies the accounting for income taxes.

The Company determined that these modifications did not have an impact on its financial statements.

UNITED-GUARDIAN, INC.

In June 2016, the FASB issued ASU- 2016 - 13 “Financial Instruments –

Credit Losses”.

This guidance affects organizations that hold financial assets and net investments in leases that are not accounted for at fair value with changes in fair value reported in net income.

The guidance requires organizations to measure all expected credit losses for financial instruments at the reporting date based on historical experience, current conditions and reasonable and supportable forecasts.

It is effective for fiscal years beginning after December 15, 2022.

The Company is currently evaluating if this pronouncement will have a potential impact on its financial statements.

NOTE B - MARKETABLE SECURITIES

Marketable securities

include investments in fixed income and equity mutual funds and U.S.

Government securities with maturities greater than 3 months,

which are reported at their fair values.

The Company’s

Treasury Bills are considered debt securities and unrealized gains and losses, if any, are reported in other comprehensive

Treasury Bills are considered held to maturity securities, as they are purchased directly from the U.S.

and are unable to be sold before the maturity date.

The disaggregated net

gains and losses on the marketable securities recognized in the income statement for the years ended December 31, 2020 and 2019

are as follows:

Years ended December 31,

Net gains recognized during the year on marketable securities

Net gains recognized during the year on marketable securities sold during the period

Unrealized (losses) gains recognized during the reporting year on marketable securities still held at the reporting date

The fair values of

the Company’s marketable securities are determined in accordance with US GAAP, with fair value being defined as the amount

that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at

the measurement date.

As such, fair value is a market-based measurement that should be determined based on assumptions that market

participants would use in pricing an asset or liability.

As a basis for considering such assumptions, the Company utilizes the

three-tier value hierarchy, as prescribed by US GAAP, which prioritizes the inputs used in measuring fair value as follows:

Level 1 - inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

Level 2 - inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs

that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial

Level 3 –

Marketable securities include investments in fixed income and equity mutual funds with maturities greater than 3 months, which are reported at their fair values.

The disaggregated net gains and losses on the marketable securities recognized in the income statement for the years ended December 31, 2021 and 2020 are as follows:

Years ended December 31,  

Net (loss) gain recognized during the year on marketable securities

$ 298,585  

Net gains realized during the year on marketable securities sold during the period

Net unrealized loss recognized during the reporting year on marketable securities still held at the reporting date

$ ( 134,935 )

$ ( 117,010 )

The fair values of the Company’s marketable securities are determined in accordance with US GAAP, with fair value being defined as the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability.

As a basis for considering such assumptions, the Company utilizes the three -tier value hierarchy, as prescribed by US GAAP, which prioritizes the inputs used in measuring fair value as follows:

•    Level 1 - inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

•    Level 2 - inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

•    Level 3 –

inputs to the valuation methodology are unobservable and significant to the fair value measurement.

The Company’s

marketable equity securities, which are considered available-for-sale securities, are re-measured to fair value on a recurring

basis and are valued using Level 1 inputs using quoted prices (unadjusted) for identical assets in active markets.

The following

tables summarize the Company’s investments:

The Company’s marketable equity securities, which are considered available-for-sale securities, are re-measured to fair value on a recurring basis and are valued using Level 1 inputs using quoted prices (unadjusted) for identical assets in active markets.

The following tables summarize the Company’s investments:

UNITED-GUARDIAN, INC.

December 31, 2021

Fair Value  

Equity Securities

Unrealized Gain

Fixed income mutual funds

$ 6,814,420  

$ 6,873,333  

$ 58,913  

Equity and other mutual funds

651,748  

762,130  

110,382  

Total equity securities

Total marketable securities

Debt Securities

U.S Treasury Bills (maturities of greater than three months up to one year)

Total debt securities

$ 7,466,168  

$ 7,635,463  

$ 169,295  

December 31, 2020

Fair Value  

Equity Securities

Fixed income mutual funds

$ 6,703,107  

$ 6,907,270  

$ 204,163  

Equity and other mutual funds

584,044  

684,111  

100,067  

Total equity securities

7,287,151  

7,591,381  

304,230  

Total marketable securities

Investment income is

recognized when earned and consists principally of interest income from fixed income mutual funds and U.S.

Treasury Bills and dividend

income from equity and other mutual funds.

Realized gains and losses on sales of investments are determined on a specific identification

Proceeds from the sale

and redemption of marketable securities amounted to $6,371,128 for the year ended December 31, 2020, which included realized gains

Proceeds from the sale and redemption of marketable securities for the year ended December 31, 2019 amounted to $15,964,917,

which included realized gains of $262,399.

NOTE C –

$ 7,287,151  

$ 7,591,381  

$ 304,230  

Investment income is recognized when earned and consists principally of dividend income from equity and fixed income mutual funds.

Realized gains and losses on sales of investments are determined on a specific identification basis.

Proceeds from the sale and redemption of marketable securities amounted to $ 4,152,660 for the year ended December 31, 2021, which included realized gains of $ 111,917 .

Proceeds from the sale and redemption of marketable securities for the year ended December 31, 2020 amounted to $ 6,371,128 , which included realized gains of $ 415,595 .

NOTE C –

INVENTORIES  

Inventories consist of the following:

Raw materials

$ 494,348  

$ 415,415  

Work in process

119,069  

59,258  

Finished products

797,372  

941,100  

Total Inventories

Inventories are valued

at the lower of cost and net realizable value.

Cost is determined using the average cost method, which approximates cost determined

by the first-in, first-out method.

Finished product inventories at December 31, 2020 and December 31, 2019 are net of a reserve

At December 31, 2020 and 2019, the Company had an allowance of $302,715 and $231,392 respectively, for possible outdated

material returns, which is included in accrued expenses.

As of the date of this report, the COVID-19 pandemic has not adversely

affected the valuation of the Company’s finished products, work in process or raw material inventories.

$ 1,410,789  

$ 1,415,773  

Inventories are valued at the lower of cost and net realizable value.

Cost is determined using the average cost method, which approximates cost determined by the first -in, first -out method.

Finished product inventories at December 31, 2021 and December 31, 2020 are net of a reserve of $ 35,000 .

As of the date of this report, the COVID- 19 pandemic has not adversely affected the valuation of the Company’s finished products, work in process or raw material inventories.

UNITED-GUARDIAN, INC.

NOTE D –

The provision for income taxes consists

of the following:

NOTE D –

The provision for income taxes consists of the following:

Years ended December 31,

$ 1,287,749  

$ 1,091,148  

Total current provision for income taxes

deferred (benefit from) provision for income taxes

provision for income taxes

The following is a

reconciliation of the Company’s effective income tax rate to the Federal statutory rate (dollar amounts have been rounded

to the nearest thousand):

1,287,845  

1,091,193  

Total deferred benefit from income taxes

Total provision for income taxes

$ 1,219,383  

$ 856,022  

The following is a reconciliation of the Company’s effective income tax rate to the Federal statutory rate (dollar amounts have been rounded to the nearest thousand):

Years ended December 31,

Income taxes at statutory federal income tax rate

Nondeductible expenses

$ 1,234,364  

$ 873,810  

Research & development credits

Non-taxable dividends

( 4,848 )  

Provision for income taxes

The tax effects of

temporary differences which comprise the deferred tax assets and liabilities are as follows:

$ 1,219,383  

$ 856,022  

The tax effects of temporary differences which comprise the deferred tax assets and liabilities are as follows:

Deferred tax assets

Allowance for doubtful accounts

$ 4,253  

$ 2,944  

Accounts payable

86,288  

Accrued expenses

339,884  

284,145  

Total deferred tax assets

$ 437,775  

$ 301,117  

Deferred tax liabilities

4 unchanged sentences

Total deferred tax liabilities

deferred tax liability

Net deferred tax liability

$ ( 151,684 )

UNITED-GUARDIAN, INC.

1 unchanged sentence

Defined Contribution Plan

The Company sponsors

a 401(k) defined contribution plan ("DC Plan") that provides for a dollar-for-dollar employer matching contribution of

the first 4% of each employee's pay.

Employees become fully vested in employer matching contributions after one year of employment.

The Company sponsors a 401 (k) defined contribution plan ("DC Plan") that provides for a dollar-for-dollar employer matching contribution of the first 4 % of each employee's pay.

Employees become fully vested in employer matching contributions immediately.

Company 401 (k) matching contributions were approximately $ 80,000 and $ 83,000 for the years ended December 31, 2021 and 2020, respectively.

The Company also makes

discretionary contributions to each employee's account based on a "pay-to-pay"

safe-harbor formula that qualifies the

401(k) Plan under current IRS regulations.

For the years ended December 31, 2020 and 2019, the Company’s Board of Directors

authorized discretionary contributions in the amount of $130,000 and $145,000, respectively, to be allocated among all eligible

The Company also makes discretionary contributions to each employee's account based on a "pay-to-pay" safe-harbor formula that qualifies the 401 (k) Plan under current IRS regulations.

For the years ended December 31, 2021 and 2020, the Company’s Board of Directors authorized discretionary contributions in the amount of $ 109,000 and $ 130,000 , respectively, to be allocated among all eligible employees.

Employees become vested in the discretionary contributions as follows:

20% after two years of employment, and 20% for

each year of employment thereafter until the employee becomes fully vested after six years of employment.

20 % after two years of employment, and 20 % for each year of employment thereafter until the employee becomes fully vested after six years of employment.

The discretionary contribution for 2021 will be paid in January 2022 and is included in accrued expenses at December 31, 2021.

NOTE F - GEOGRAPHIC and OTHER INFORMATION

Through its Guardian

Laboratories division 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

The Company’s R&D department not only develops new products but also modifies and refines existing products,

with the goal of expanding the potential markets for the Company’s products.

Many of the cosmetic ingredients manufactured

by the Company, particularly its Lubrajel line of water-based moisturizing and lubricating gels, are currently used by many of

the major multinational personal care products companies.

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.

Through its Guardian Laboratories division, the Company conducts research, product development, manufacturing, and marketing of cosmetic ingredients, personal and health care products, pharmaceuticals, non-pharmaceutical medical products, and proprietary specialty industrial products.

All the products that the Company markets, exception 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.

The Company’s R&D department not only develops new products but also modifies and refines existing products, with the goal of expanding the potential markets for the Company’s products.

Many of the cosmetic ingredients manufactured by the Company, particularly its Lubrajel line of water-based moisturizing and lubricating gels, are currently used by many of the major multinational personal care products companies.

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 cosmetic ingredients

are marketed through a global network of marketing partners and distributors.

These marketing partners purchase product outright

from the Company and provide the marketing functions for these products on behalf of the Company.

They in turn receive their compensation

for those efforts by re-selling those products at a markup to their customers.

This enables the Company to aggressively have its

products marketed without the high cost of maintaining its own in-house marketing staff.

The Company has written marketing arrangements

with only one of its global distributors, ASI, and that contract renews every two years unless cancelled for any reason by either

party at least 60 days prior to the expiration of the two-year marketing period in effect at that time.

The current marketing period

with ASI ends on December 31, 2021.

The Company’s other marketing partners are not under any contractual obligation to market

the Company’s cosmetic ingredients, and the Company has the ability to cancel those marketing arrangements at any time upon

reasonable notice.

All sales of the Company’s cosmetic ingredients are final other than product later determined to be defective,

and the Company does not make any sales on consignment.

The cosmetic ingredients are marketed through a global network of marketing partners and distributors.

These marketing partners purchase product outright from the Company and provide the marketing functions for these products on behalf of the Company.

They in turn receive their compensation for those efforts by re-selling those products at a markup to their customers.

This enables the Company to aggressively have its products marketed without the high cost of maintaining its own in-house marketing staff.

The Company has written marketing arrangements with only one of its global distributors, ASI, and that contract renews every two years unless cancelled for any reason by either party at least 60 days prior to the expiration of the two -year marketing period in effect at that time.

The current marketing period with ASI ends on December 31, 2023.

The Company’s other marketing partners are not under any contractual obligation to market the Company’s cosmetic ingredients, and the Company has the ability to cancel those marketing arrangements at any time upon reasonable notice.

All sales of the Company’s cosmetic ingredients are final other than product later determined to be defective, and the Company does not make any sales on consignment.

UNITED-GUARDIAN, INC.

No prior regulatory

approval is needed by the Company to sell any products other than its pharmaceutical products.

The end users of its products may

or may not need regulatory approvals, depending on the intended claims and uses of those products.

The pharmaceutical

products are two urological products that are sold to end users primarily through distribution agreements with the major drug wholesalers.

For these products, the Company does the marketing, and the drug wholesalers supply the product to the end users, such as hospitals

and pharmacies.

The Company’s marketing efforts for these products are currently centered around the corporate website, a

separate website developed specifically for Renacidin, its most important drug product, and internet marketing using Google ads.

No prior regulatory approval is needed by the Company to sell any products other than its pharmaceutical products.

The end users of its products may or may not need regulatory approvals, depending on the intended claims and uses of those products.

The pharmaceutical products are two urological products that are sold to end users primarily through distribution agreements with the major drug wholesalers.

For these products, the Company does the marketing, and the drug wholesalers supply the product to the end users, such as hospitals and pharmacies.

The Company’s marketing effort for Renacidin, its most important drug product, centers around a separate Renacidin website, along with internet advertising using Google ads.

There is currently no active marketing effort for Clorpactin.

Both of these products were originally developed in the 1950s.

Clorpactin pre-dated the need for a formal New Drug Application

(“NDA”), and the current sterile liquid form of Renacidin is being marketed under an NDA that was approved by the FDA

The medical products

are not pharmaceutical products.

They consist primarily of medical lubricants, which are marketed by the Company directly to manufacturers

that incorporate them into urologic catheters and other medical devices and products that they sell.

These products are distinguished

from the pharmaceutical products in that, unlike the pharmaceutical products, the Company is not required to obtain regulatory

approval prior to marketing these products.

Approvals are the responsibility of the company that markets the products in which

the Company’s products are used, such as medical devices.

However, the Company is responsible for manufacturing these products

in accordance with current Good Manufacturing Practices for medical devices.

The industrial products

are also marketed by the Company directly to manufacturers, and generally do not require that the Company obtain regulatory approval.

Clorpactin pre-dated the need for a formal New Drug Application (“NDA”), and the current sterile liquid form of Renacidin is marketed under an NDA that was approved by the FDA in 1990.

The medical products are not pharmaceutical products.

They consist primarily of water-based lubricating gels, which are marketed by the Company directly to manufacturers that incorporate them into urologic catheters and other medical devices and products that they sell.

These products are distinguished from the pharmaceutical products in that, unlike the pharmaceutical products, the Company is not required to obtain regulatory approval prior to marketing them.

Approvals are the responsibility of the company that markets the products in which the Company’s products are used, which are typically classified as medical devices.

However, the Company is responsible for manufacturing these products in accordance with current Good Manufacturing Practices for medical devices, and its manufacturing facility is subject to regular FDA oversight.

The industrial products are also marketed by the Company directly to manufacturers, and generally do not require that the Company obtain regulatory approval.

However, the manufacturers of the finished products may have to obtain such regulatory approvals before marketing these products.

The following tables

present the significant concentrations of the Company’s sales.

Although a significant percentage of Customer A’s purchases

from the Company are sold to foreign customers, in table “b”

below all sales to Customer A are included in “United

States”

The following tables present the significant concentrations of the Company’s sales.

Although a significant percentage of Customer A’s purchases from the Company are sold to foreign customers, in table “b”

below all sales to Customer A are included in “United States”

sales revenue because all shipments to Customer A are delivered to Customer A's warehouses in the U.S.

In addition, there

are four customers for the Company’s medical products that take delivery of their shipments in the U.S.

but potentially ship

some of that product to manufacturing facilities outside the U.S.

In addition, there are four customers for the Company’s medical products that take delivery of their shipments in the U.S.

but potentially ship some of that product to manufacturing facilities outside the U.S.

Since the Company makes those shipments to U.S.

locations, sales

to those customers are also included in the “United States”

locations, sales to those customers are also included in the “United States”

revenue number in the table below.

(a) Net Sales Years ended December 31,

Years ended December 31,  

Cosmetic Ingredients

$ 6,872,714  

$ 4,283,052  

Pharmaceuticals

5,748,244  

5,959,705  

Medical Products

2,175,822  

2,054,093  

Industrial and other

150,387  

139,482  

14,947,167  

12,436,332  

Discounts and allowances

( 1,017,538 )

( 1,450,251 )

$ 13,929,629  

$ 10,986,081  

UNITED-GUARDIAN, INC.

(b) Geographic Information

Geographic Information

Years ended December 31, .

United States

$ 11,159,341  

$ 8,796,221  

Other countries

Years ended December 31,

2,770,288  

2,189,860  

$ 13,929,629  

$ 10,986,081  

Gross Sales to Major Customers

Years ended December 31,  

$ 5,641,279  

$ 3,236,113  

2,526,869  

2,796,310  

1,522,882  

1,485,288  

1,488,301  

1,434,097  

All other customers

3,767,836  

3,484,524  

Total Gross Sales

$ 14,947,167  

$ 12,436,332  

NOTE G - ACCRUED EXPENSES

Accrued expenses at December 31, 2020 and

2019 consist of:

Accrued expenses at December 31, 2021 and 2020 consist of:

$ 348,000  

$ 210,000  

Distribution fees

359,550  

325,792  

Payroll and related expenses

292,560  

245,521  

Company 401(k) contribution

109,000  

Annual report expenses

64,038  

63,432  

61,500  

50,500  

Reserve for outdated material

313,904  

302,713  

Sales rebates

56,857  

149,346  

21,981  

16,153  

Total accrued expenses

NOTE H - SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

AND NON-CASH INVESTING AND FINANCING ACTIVITIES

Cash payments for income

taxes were $1,025,000 and $1,100,000 for the years ended December 31, 2020 and 2019, respectively.

As of December 31,

2020, the Company had a number of unconverted Guardian shares that would convert to approximately 1,369 shares of United-Guardian,

$ 1,627,390  

$ 1,363,457  

NOTE H - SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION AND NON-CASH INVESTING AND FINANCING ACTIVITIES

As of December 31, 2021, the Company had a number of unconverted Guardian shares that would convert to approximately 1,369 shares of United-Guardian, Inc.

common stock if all of the remaining holders of those Guardian shares converted their Guardian stock to United-Guardian stock.

The Company’s transfer agent continues to try to locate the holders of those shares in anticipation of escheating them to

the appropriate state jurisdictions.

The Company is currently accruing dividends on the 1,369 shares that have not yet been exchanged

or designated for escheatment as of December 31, 2020, and the Company will continue to do so as dividends are declared.

During the third quarter

of 2020, the Company paid approximately $124,041 to its transfer agent, which represented accrued dividends on unconverted Guardian

The Company’s transfer agent continues to try to locate the holders of those shares in anticipation of escheating them to the appropriate state jurisdictions.

The Company is currently accruing dividends on the 1,369 shares that have not yet been exchanged or designated for escheatment as of December 31, 2021, and the Company will continue to do so as dividends are declared.

During the third quarter of 2020, the Company paid approximately $ 124,041 to its transfer agent, which represented accrued dividends on unconverted Guardian shares.

This payment was made to facilitate the conversion of those shares to United-Guardian, Inc.

shares, and the subsequent

escheatment of those shares to the appropriate state jurisdictions.

shares, and the subsequent escheatment of those shares to the appropriate state jurisdictions.

UNITED-GUARDIAN, INC.

NOTE I - RELATED PARTY TRANSACTIONS

During each of the

years ended December 31, 2020 and 2019, the Company paid Bonamassa, Maietta, and Cartelli, LLP, $16,250 and $17,500, respectively,

for accounting and tax services.

Lawrence Maietta, a partner in Bonamassa, Maietta, and Cartelli, LLP (newly part of PKF O’

Connor Davies), is a director of the Company.

NOTE J –

During the year ended December 31, 2021, the Company paid PKF O’Connor Davies $ 19,500 for accounting and tax services.

During the year ended December 31, 2020, the Company paid Bonamassa, Maietta, and Cartelli, LLP (now part of PKF O’Connor Davies), $ 16,250 for accounting and tax services.

Lawrence Maietta, a partner at PKF O’Connor Davies, is a director of the Company.

NOTE J –

SUBSEQUENT EVENTS

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.

On January 25, 2022, the Company announced that its Board of Directors had launched a formal review process to explore strategic alternatives.

The purpose of the review is to ensure that value is being maximized for shareholders, and that the Company has sufficient scale and financial resources to take advantage of potential growth opportunities available.

These alternatives could include, among others, an outright sale of the Company, possible joint ventures, strategic partnerships or alliances, or other possible transactions.

In furtherance of this goal, the Company retained Capstone Partners, a Denver- and Boston-based financial advisory and investment banking company to assist it with this endeavor.

The Company paid a non-refundable fee of $ 75,000 to Capstone in connection with the work they would be performing on behalf of the Company.

The Company also retained the Denver-based law firm of Brownstein Hyatt Farber Schreck, LLP to assist with the legal aspects of any possible transactions that might result from the efforts of Capstone.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures