UNITED GUARDIAN INC 10-K

Item 9A. Controls and Procedures.   (a) Evaluation of Disclosure Controls and Procedures   The Company’s management, with the participation of the Company’s Principal Executive Officer and Principal Financial Officer, has evaluated the design, operation, and effectiveness of the Company’s disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act as of December 31, 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.   23   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.   (c) Changes in Internal Control over Financial Reporting   There were no changes in the Company’s internal control over financial reporting in the fourth quarter of 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.   Item 9B. Other Information.   None.   Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections   Not applicable.           24   UNITED-GUARDIAN, INC.   PART III   Item 10. 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 Age Biographical Information Ken Globus    President    Principal Executive Officer    General Counsel    Chairman of the Board 70 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. Peter A. Hiltunen    Senior Vice President    Production Manager 63 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. Andrea Young    Principal Financial Officer    Controller; Treasurer    Secretary 53 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 42 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.   DIRECTORS   Six directors are to be elected at the next annual meeting of stockholders of the Company (which has not been scheduled as of the date of this Annual Report on Form 10-K). Directors serve until the next annual meeting of stockholders and until their successors have been elected and qualified. Set forth in the table below are the names of all persons who are currently directors of the Company, the principal occupation or employment of each such person for at least the past five years, his present position(s) with the Company, his qualifications to serve as a director, other board memberships of public companies, and the year he was first elected a director.   25   UNITED-GUARDIAN, INC.   Name and Position with the Company Age Principal Occupation, Qualifications, and other Boards Year First Elected a Director Ken Globus    President    Chief Executive Officer    General Counsel    Chairman of the Board                     70 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. 1982 Lawrence F. Maietta    Director 64 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. (2) 1994 Arthur M. Dresner    Director 80 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. (1) (2) 1997 Andrew A. Boccone    Director 76 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. (1) (2) 2002 S. Ari Papoulias    Director 68 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) 2016   (1) Member of Audit Committee (2) Member of Compensation Committee   There are no family relationships between any director and/or officer of the Company.   26   UNITED-GUARDIAN, INC.   BOARD MEETINGS   During the fiscal year ended December 31, 2021, the Board held four regular meetings via Zoom videoconference, as well as several additional meetings. All five directors participated in all of the regular meetings the additional directors’ meetings, and the Annual Meeting of Stockholders.   AUDIT COMMITTEE   The Company has an Audit Committee (“Committee”) that is currently composed of three of the Company’s independent directors, as well as an additional outside director that has expertise in both accounting and financial reporting, who acts as an advisor to the Committee. The members of the Committee are elected annually by the Board of Directors. The Committee was established for the purpose of assisting the Board of Directors in fulfilling its oversight responsibilities, including (a) overseeing the Company’s accounting and financial reporting processes, including preparation of financial statements and audits; (b) assuring the Company’s compliance with all legal, regulatory, and ethical responsibilities; (c) evaluating the qualifications and independence of the Company’s independent accountants; and (d) assessing the effectiveness of the Company’s internal controls and risk management procedures. The Committee currently meets five times a year and is governed by a charter that was adopted in 2006 and updated in 2020.   In addition to assessing the independence of the Audit Committee members under NASDAQ rules, the Board also considered the requirements of Section 10A(m)(3) and Rule 10a-3 under the Exchange Act in regard to having a financial “expert” on the Audit Committee. Due to the significant expense involved in recruiting another Board member for the sole purpose of having a financial “expert” on the Audit Committee, the Board instead determined that S. Ari Papoulias was “financially sophisticated” as that term is defined by NASDAQ, and that Lawrence F. Maietta, a Certified Public Accountant and former member of the Audit Committee, while not considered independent for purposes of membership on the Audit Committee, would be considered a financial “expert” and therefore could act as an advisor to the Audit Committee and provide the necessary financial expertise.   COMPENSATION COMMITTEE   The 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. Lawrence F. Maietta, Arthur M. Dresner, and Andrew A. Boccone. Ken Globus acts as advisor to the Committee representing management. The Committee held one meeting via Zoom videoconference in 2021. The Compensation Committee does not have a charter. Neither management nor the 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.   27   UNITED-GUARDIAN, INC.   ROLE OF THE BOARD IN RISK OVERSIGHT   The Board views risk management as a process designed to identify, manage, and control risks that may adversely affect the Company, so that they are appropriate considering the Company's size, operations and business objectives. The Company's risk management policies enable the Company to manage risk within acceptable limits and provide reasonable assurance of optimum corporate performance in the area of risk/return. The Board has ultimate responsibility for oversight of the Company's risk management processes, and discharges this responsibility through regular reports received from, and discussions with, senior management on all areas of material risk exposure to the Company. These reports and discussions include, among other things, operational, financial, legal and regulatory, and strategic risks. The full Board engages with the appropriate members of senior management to enable its members to understand and provide input to, and oversight of, risk identification, risk management and risk mitigation strategies. In addition, the Company's Audit Committee is responsible for evaluating and monitoring financial risks, and meets regularly in executive session without management present to, among other things, discuss the Company's risk management culture and processes. While the Board oversees the Company’s risk management, the Company’s senior management is responsible for day-to-day risk management processes.   STOCKHOLDER COMMUNICATIONS WITH THE BOARD   The Board has adopted the following procedure for stockholders to send communications to the Board other than stockholder proposals for consideration at the annual meeting of stockholders which should be submitted to our Corporate Secretary. Stockholders who wish to send communications to directors should refer to the Company’s website at: www.u-g.com and direct those communications to Mr. Arthur M. Dresner, Chairman of the Audit Committee, whose email address is posted there. All communications sent to Mr. Dresner, but addressed to other Board members, will be forwarded to that Board member by Mr. Dresner.   CODE OF ETHICS   The Company has adopted a Code of Business Conduct and Ethics that applies to all officers, directors, and employees serving in any capacity to the Company, including the Chief Executive Officer and/or President, Chief Financial Officer, and Principal Accounting Officer. A copy of the Company's Code of Business Conduct and Ethics is available on the Company's website at http://www.u-g.com/corporate. The Company intends to satisfy the disclosure requirement under Item 5.05 of Form 8-K relating to amendments to or waivers from any provision of its Code of Business Conduct and Ethics applicable to the Chief Executive Officer, Chief Financial Officer, and Principal Accounting Officer by posting this information on the Company's website.   INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS   None of the Company’s officers, directors, or control persons have been involved in any legal proceedings as described in Item 401(f) of Regulation S-K.         28   UNITED-GUARDIAN, INC.   Section 16(a) Beneficial Ownership Reporting Compliance   Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act") requires the Company's officers, directors and persons who own more than 10% of a class of the Company's equity securities to file reports of beneficial ownership and changes in beneficial ownership with the SEC. Officers, directors and greater than 10% stockholders are required by SEC regulations to furnish the Company with copies of all Section 16(a) forms they file. Based on (i) a review of copies of Forms 3, 4, and 5 and any amendments thereto furnished to the Company during and with respect to the fiscal year ended December 31, 2021 and (ii) any written representations signed by reporting persons that no Form 5 is required, the Company believes that all persons subject to the reporting requirements pursuant to Section 16(a) filed the required reports on a timely basis during and with respect to the fiscal year ended December 31, 2021.   Item 11. Executive Compensation.   EXECUTIVE COMPENSATION   The following table sets forth for the years ended December 31, 2021 and December 31, 2020 certain information concerning the compensation paid to the Company's executive officers:   Name and position   Year   Salary ($) Bonus ($) Stock awards ($) Option awards ($) Non-equity incentive plan compen-sation ($) Non-qualified deferred compen-sation earnings ($) All other compen-sation (1) ($) Total ($) Ken Globus    President    Chief Executive Officer    Chairman of the Board 2021 284,876 91,700         29,209 405,785   2020 280,498 131,100 - - - - 29,155 440,753 Donna Vigilante    Vice President    R&D Manager    Director of Technical    Services 2021 122,733 30,000         15,383 168,116 Andrea Young   Chief Financial Officer    Controller, Treasurer,    Secretary 2020 109,817 25,000 - - - - 13,749 148,566 Peter A. Hiltunen    Senior Vice President    Production Manager 2021 166,522 25,000         19,290 210,812   2020 163,987 34,800 - - - - 18,922 217,709   (1) 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):   29   UNITED-GUARDIAN, INC.   Name   Fees earned or paid in cash ($) Stock awards ($) Option awards ($) Non-Equity incentive plan compensation ($) Nonqualified deferred compensation earnings ($) All other compensation ($) Total ($) Lawrence F. Maietta 47,200 - - - - 19,500 (1) 66,700 Arthur M. Dresner 51,700 - - - - - 51,700 Andrew A. Boccone 48,200 - - - - - 48,200 S. Ari Papoulias 46,200 - - - - - 46,200   (1) 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.   Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS   The following table sets forth the shares of the Company's Common Stock, par value $.10 per share (the only class of stock issued and outstanding), owned beneficially by each person who, as of March 1, 2022, is known by the Company to have owned beneficially more than 5% of the outstanding Common Stock. Regarding the shares referenced in footnote (1) below, the beneficial owner has both sole voting power and sole investment power, except for those shares held by his spouse as noted.   Name and Address of Beneficial Owner Number of Shares Owned Percent of Class Ken Globus c/o United-Guardian, Inc. 230 Marcus Blvd., Hauppauge, NY 11788 1,318,053  (1) 28.7% Dr. Betsee Parker P.O. Box 2198, Middleburg, VA 20118 354,133 (2)  7.7% Renaissance Technologies LLC 800 Third Avenue, New York, NY 10022 230,263 (3) 5.0% Mario J. Gabelli One Corporate Center, Rye, NY 10580 256,811 (4) 5.6%     (1) 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.     (2) As of March 8, 2022, based on information provided to the Company by a representative of Dr. Betsee Parker.     (3) Based on Schedule 13G/A filed by Renaissance Technologies LLC with the SEC on February 11, 2022     (4) 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.   30   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 Percent of Class Ken Globus 1,318,053 (1) 28.7% Arthur M. Dresner 12,175   (2) Lawrence F. Maietta 4,000   (2) Peter A. Hiltunen 320   (2) Andrew A. Boccone 0   (2) S. Ari Papoulias 0   (2) Andrea Young 0   (2) Donna Vigilante 0   (2)      All Officers and directors as a group (8 persons) 1,334,548   29.1%   (1) 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.   (2) Less than one percent (1%)     Item 13. Certain Relationships and Related Transactions, and Director Independence.   RELATED PARTY TRANSACTIONS   The Company has adopted a written policy for the approval of "related party" transactions. Under the policy, related parties are defined to include executive officers and directors of the Company and their immediate family members, a stockholder owning in excess of 5% of the Company, and entities in which any of the foregoing have a substantial ownership interest or control. The policy applies to any transactions that exceed or are expected to exceed $50,000 in a single calendar year.   The policy provides that the Audit Committee will review transactions subject to the policy and decide whether or not to approve or ratify those transactions. In doing so, the Audit Committee will make a determination as to whether the transaction is in the best interests of the Company and its stockholders, taking into account (a) the benefits to the Company and its stockholders; (b) the extent of the related person’s interest in the transaction; (c) whether the transaction is on terms generally available to an unaffiliated third-party under the same or similar circumstances; (d) the impact or potential impact on a director’s independence in the event the related party is a director, an immediate family member of a director, or an entity in which a director is a partner, shareholder or executive officer; and (e) the terms of each transaction. The policy also provides that director and officer compensation that is approved by the Board or the Compensation Committee is exempt from this approval process and will be considered to be pre-approved. The Related Party Transaction Policy can be found on the Company's web site at www.u-g.com.   There were no related party transactions during the fiscal year ended December 31, 2021.   31   UNITED-GUARDIAN, INC.   Item 14. Principal Accounting Fees and Services.   Audit Fees   The aggregate fees that have been billed by Baker Tilly US, LLP (“Baker Tilly”), the Company’s principal accountants since March 25, 2019, for the quarterly reviews of the Company’s financial statements for the first, second and third quarters of 2020 and the audit of the Company’s financial statements for the 2020 fiscal year were $89,500.   The aggregate fees that have been, or are expected to be, billed by 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.   Tax Fees   There were no fees billed by Baker Tilly during the last two fiscal years for professional services rendered for tax compliance, tax advice, or tax planning. Accordingly, none of such services were approved pursuant to pre-approval procedures or permitted waivers thereof.   All Other Fees   There were no other non-audit-related fees billed to the Company by Baker Tilly in 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.   32   UNITED-GUARDIAN, INC.   Item 15. Exhibits, Financial Statement Schedules.   (a)    Documents filed as part of this report.         (i) Financial Statements - see Item 8. Financial Statements and Supplementary Data.         (ii) 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.)       (iii) Report of Independent Registered Public Accounting Firm.       (iv) Notes to Financial Statements.     (b)    Exhibits          The exhibits listed on the accompanying Exhibit Index are filed as part of this Annual Report.   Item 16. Form 10-K Summary.   None   SIGNATURES     Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.     UNITED-GUARDIAN, INC.         By: /s/ Ken Globus     Ken Globus Date: March 16, 2022   President and Director                                                                                                           33   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.   Signature   Title   Date           By: /s/ Ken Globus        Ken Globus   President (Principal Executive Officer); General Counsel; Chairman of the Board of Directors   March 16, 2022                               By: /s/ Andrea J. Young        Andrea J. Young   Chief Financial Officer (Controller, Principal Financial Officer, and Principal Accounting Officer); Treasurer; Secretary   March 16, 2022           By: /s/ Lawrence F. Maietta   Director; Advisor to the Audit Committee   March 16, 2022         Lawrence F. Maietta                   By: /s/ Arthur M. Dresner   Director; Chairman of the Audit Committee   March 16, 2022        Arthur M. Dresner                                 By: /s/ Andrew A. Boccone   Director; Audit Committee member   March 16, 2022         Andrew A. Boccone                               By: /s/ S. Ari Papoulias   Director; Audit Committee member   March 16, 2022         S. Ari Papoulias             EXHIBIT INDEX   Exhibit #   Description         2   P* 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").           3 (a)   P* 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").         3 (b)      P* By-laws of the Company. Incorporated by reference to Exhibit 4.2 to the 1987 8-K.         4 (a) P* Specimen Certificate for shares of Common Stock of the Company. Incorporated by reference to Exhibit 4(a) to the 1988 10-K.         10 (a)   P* 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.         *P: Indicates a paper filing   34   UNITED-GUARDIAN, INC.     10 (b)   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.         10 (c)   Letter Amendment between the Company and ISP Technologies Inc. dated December 16, 2002 amending the Exclusive Distributor Agreement between the Registrant and ISP Technologies Inc. dated July 5, 2000. Incorporated by reference to Exhibit 10(d) to the Registrant's Annual Report on Form 10-KSB for the fiscal year ended December 31, 2002.         10 (d)   Letter Amendment between the Company and ISP Technologies Inc. dated December 20, 2005 amending the Exclusive Distributor Agreement between the Registrant and ISP Technologies Inc. dated July 5, 2000 and amended on December 31, 2002. Incorporated by reference to Exhibit 10(d) of the Registrant's Annual Report on Form 10-KSB for the fiscal year ended December 31, 2005.         10 (e)   Letter Amendment between the Company and ISP Technologies Inc. dated May 5, 2010 amending the Exclusive Distributor Agreement between the Company and ISP Technologies Inc. dated July 5, 2000 and amended on December 16, 2002 and December 20, 2005. Incorporated by reference to Exhibit 10.1 of the Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2010.         10 (f)   Manufacturing and Supply Agreement between the Company and Smiths Medical ASD, Inc. 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.         14     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.         21     Subsidiaries of the Company: None       31.1     Certification of Ken Globus, President and Principal Executive Officer of the Company, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.       31.2     Certification of Andrea J. Young, Principal Financial Officer of the Company, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.         32     Certifications of Ken Globus, President and Principal Executive Officer of the Company, and Andrea J. Young, Principal Financial Officer of the Company, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.         101.INS*     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. 101.SCH*     Inline XBRL Taxonomy Extension Schema Document. 101.CAL*     Inline XBRL Taxonomy Extension Calculation Linkbase Document. 101.DEF*     Inline XBRL Taxonomy Extension Definition Linkbase Document. 101.LAB*     Inline XBRL Taxonomy Extension Label Linkbase Document. 101.PRE*     Inline XBRL Taxonomy Extension Presentation Linkbase Document. 104*     Cover Page Interactive Data File (Embedded within the inline XBRL document and included in Exhibit 101.1).   * Filed herewith       35     UNITED-GUARDIAN, INC.   INDEX TO FINANCIAL STATEMENTS   (For the years ended December 31, 2021 and 2020)       Report of Baker Tilly U.S. LLP, Independent Registered Public Accounting Firm (PCAOB ID 23 ) F-1  & F-2     Financial Statements         Statements of Income F-3     Balance Sheets F-4  & F-5                             Statements of Stockholders' Equity F-6     Statements of Cash Flows F-7     Notes to Financial Statements F-8  - F-21           REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM     To the shareholders and the board of directors of United-Guardian, Inc.:   Opinion on the Financial Statements   We have audited the accompanying balance sheets of United-Guardian, Inc. (the "Company") as of December 31, 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 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.     F-1   UNITED-GUARDIAN, INC.   We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.   Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.   Critical Audit Matters   Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there are no critical audit matters.   /s/ Baker Tilly US, LLP   We have served as the Company's auditor since 2019.   Uniondale, NY March 16, 2022                       F-2     UNITED-GUARDIAN, INC.   STATEMENTS OF INCOME       Years ended December 31,       2021     2020                     Net sales   $ 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     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     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   Net income   $ 4,658,542     $ 3,304,978                     Earnings per common share (basic and diluted)   $ 1.01     $ 0.72                     Weighted average shares (basic and diluted)     4,594,319       4,594,319                                   See Notes to Financial Statements   F-3     UNITED-GUARDIAN, INC.   BALANCE SHEETS ASSETS       December 31,       2021     2020   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:                 Land     69,000       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     658,862       673,665                     TOTAL ASSETS   $ 12,242,252     $ 11,920,276                               See Notes to Financial Statements   F-4   UNITED-GUARDIAN, INC.   BALANCE SHEETS LIABILITIES AND STOCKHOLDERS' EQUITY         December 31,       2021     2020   Current liabilities:                 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’ equity:                 Common stock, $ .10 par value; 10,000,000 shares authorized; 4,594,319 shares issued and outstanding at December 31, 2021 and 2020, respectively     459,432       459,432   Retained earnings     9,361,837       9,894,875   Total stockholders ’ equity     9,821,269       10,354,307   TOTAL LIABILITIES AND STOCKHOLDERS ’ EQUITY   $ 12,242,252     $ 11,920,276                 See Notes to Financial Statements   F-5     UNITED-GUARDIAN, INC.   STATEMENTS OF STOCKHOLDERS' EQUITY Years ended December 31, 2021 and 2020         Common stock                       Shares     Amount       Retained earnings     Total                                     Balance, January 1, 2020     4,594,319     $ 459,432     $ 10,173,466     $ 10,632,898                                                                       Net income     -       -       3,304,978       3,304,978                                     Dividends declared, not paid ($ .78 per share)     -       -       ( 1,138 )     ( 1,138 )                                   Dividends declared and paid ($ .78 per share)     -       -       ( 3,582,431 )     ( 3,582,431 )                                   Balance, December 31, 2020     4,594,319     $ 459,432     $ 9,894,875     $ 10,354,307                                                                       Net income     -       -       4,658,542       4,658,542                                     Dividends declared, not paid ($ 1.13 per share)     -       -       ( 1,547 )     ( 1,547 )                                   Dividends declared and paid ($ 1.13 per share)     -       -       ( 5,190,033 )     ( 5,190,033 )                                   Balance, December 31, 2021     4,594,319     $ 459,432     $ 9,361,837     $ 9,821,269                             See Notes to Financial Statements   F-6     UNITED-GUARDIAN, INC.   STATEMENTS OF CASH FLOWS       Years ended December 31,       2021     2020   Cash flows from operating activities:                 Net income   $ 4,658,542     $ 3,304,978   Adjustments to reconcile net income to net cash provided by operating activities:                 Depreciation and amortization     145,977       165,261   Gain on sale of asset     ( 14,799 )     -   Net loss (gain) on marketable securities     23,018       ( 298,585 ) Allowance for doubtful accounts     6,235       ( 7,161 ) Deferred income taxes     ( 68,462 )     ( 235,171 ) (Increase) decrease in operating assets:                 Accounts receivable     ( 431,883 )     717,874   Inventories     4,984       ( 198,496 ) Prepaid expenses and other current assets     ( 31,371 )     9,258   Prepaid income taxes     99,107       66,193   Increase (decrease) in operating liabilities:                 Accounts payable     379,094       ( 39,585 ) Accrued expenses     263,933       234,331   Deferred revenue     190,164       -   Income taxes payable     88,738       -   Dividends payable     -       ( 124,657 ) Net cash provided by operating activities     5,313,277       3,594,240                     Cash flows from investing activities:                 Acquisitions of property, plant and equipment     ( 116,375 )     ( 43,395 ) Purchases of marketable securities     ( 4,219,760 )     ( 6,796,409 ) Proceeds from sales of marketable securities     4,152,660       6,371,128   Net cash used in investing activities     ( 183,475 )     ( 468,676 )                   Cash flows from financing activities:                 Dividends paid     ( 5,190,033 )     ( 3,582,431 ) Net cash used in financing activities     ( 5,190,033 )     ( 3,582,431 )                   Net decrease in cash and cash equivalents     ( 60,231 )     ( 456,867 )                   Cash and cash equivalents, beginning of year     591,444       1,048,311   Cash and cash equivalents, end of year   $ 531,213     $ 591,444                     Supplemental disclosure of cash flow information                                   Taxes paid   $ 1,100,000     $ 1,025,000                     Supplemental disclosure of non-cash items:                 Dividends payable   $ 1,547     $ 1,138   Trade-in received from sale of asset   $ 29,000       -     See Notes to Financial Statements   F-7   UNITED-GUARDIAN, INC.   NOTES TO FINANCIAL STATEMENTS     NOTE A - NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES   Nature of Business   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 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   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.   F- 8   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. 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 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. 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’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.   F- 9   UNITED-GUARDIAN, INC.   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; (c) the product cannot be sold because it is too close to its expiration date; 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. 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.   F- 10   UNITED-GUARDIAN, INC.   Disaggregated net sales by product class is as follows:       Years ended December 31,       2021     2020   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   $ 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,       2021     2020   United States*   $ 11,159,341     $ 8,796,221   Other countries     2,770,288       2,189,860   Net Sales   $ 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. At December 31, 2021, approximately $ 410,000 exceeded the FDIC limit.   Dividends   On May 18, 2021, the Company’s Board of Directors declared a semi-annual cash dividend of $ 0.48 per share, which was paid on June 7, 2021 to all stockholders of record as of May 31, 2021. On November 16, 2021, the Company’s Board of Directors declared a semi-annual cash dividend of $ 0.65 per share which was paid on December 7, 2021 to all stockholders of record as of November 29, 2021. 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.   F- 11   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.   Marketable Securities   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 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   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. Assets are depreciated under both accelerated and straight-line methods. 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:    Factory equipment and fixtures (years) 5 - 7 Building (years)   40   Building improvements   Lesser of useful life or 20 years   F- 12   UNITED-GUARDIAN, INC.   Impairment of Long-Lived Assets   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, 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.   Concentration of Credit Risk   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. 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 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.     F- 13   UNITED-GUARDIAN, INC.   Income Taxes   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   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 $ 82,000 and $ 81,000 for the years ended December 31, 2021 and 2020, respectively.   Advertising Expenses   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. Diluted earnings per share would include the dilutive effect of outstanding stock options, if any.   New Accounting Standards   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.   F- 14   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 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,       2021     2020   Net (loss) gain recognized during the year on marketable securities   $ ( 23,018 )   $ 298,585   Less: Net gains realized during the year on marketable securities sold during the period     ( 111,917 )     ( 415,595 ) 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:   F- 15   UNITED-GUARDIAN, INC.   December 31, 2021                                 Cost     Fair Value     Unrealized Gain   Equity Securities                         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   $ 7,466,168     $ 7,635,463     $ 169,295     December 31, 2020       Cost     Fair Value     Unrealized Gain   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   $ 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:       December 31,       2021     2020   Raw materials   $ 494,348     $ 415,415   Work in process     119,069       59,258   Finished products     797,372       941,100   Total 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.   F-16   UNITED-GUARDIAN, INC.     NOTE D – INCOME TAXES   The provision for income taxes consists of the following:       Years ended December 31,   Current   2021     2020   Federal   $ 1,287,749     $ 1,091,148   State     96       45   Total current provision for income taxes     1,287,845       1,091,193                     Deferred                 Federal     ( 68,462 )     ( 235,171 ) State     -       -   Total deferred benefit from income taxes     ( 68,462 )     ( 235,171 ) 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,       2021       2020         ($)     Tax rate       ($)     Tax rate   Income taxes at statutory federal income tax rate   $ 1,234,364       21.0 %   $ 873,810       21.0 % Research & development credits     ( 10,000 )     ( 0.2 )     ( 10,000 )     ( 0.2 ) Non-taxable dividends     ( 2,923 )     ( 0.1 )     ( 2,940 )     ( 0.1 ) Other, net     ( 2,058 )     -       ( 4,848 )     ( 0.1 ) Provision for income taxes   $ 1,219,383       20.7 %   $ 856,022       20.6 %   The tax effects of temporary differences which comprise the deferred tax assets and liabilities are as follows:       December 31,       2021     2020   Deferred tax assets                 Allowance for doubtful accounts   $ 4,253     $ 2,944   Inventories     7,350       7,350   Accounts payable     86,288       6,678   Accrued expenses     339,884       284,145   Total deferred tax assets   $ 437,775     $ 301,117   Deferred tax liabilities                 Accounts receivable     ( 385,056 )     ( 294,360 ) Prepaid expenses     ( 38,918 )     ( 33,829 ) Depreciation on property, plant and equipment     ( 61,471 )     ( 60,724 ) Unrealized gain on marketable securities     ( 35,552 )     ( 63,888 ) Total deferred tax liabilities     ( 520,997 )     ( 452,801 ) Net deferred tax liability   $ ( 83,222 )   $ ( 151,684 )   F-17   UNITED-GUARDIAN, INC.     NOTE E - BENEFIT PLANS   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 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, 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. 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 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, 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.   F- 18   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 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 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” 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. Since the Company makes those shipments to U.S. 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,         2021       2020    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   Gross Sales     14,947,167       12,436,332   Less: Discounts and allowances     ( 1,017,538 )     ( 1,450,251 ) Net Sales   $ 13,929,629     $ 10,986,081     F- 19   UNITED-GUARDIAN, INC.     (b) Geographic Information       Years ended December 31, .       2021     2020   United States   $ 11,159,341     $ 8,796,221   Other countries     2,770,288       2,189,860   Net Sales   $ 13,929,629     $ 10,986,081         (c) Gross Sales to Major Customers       Years ended December 31,       2021     2020   Customer A   $ 5,641,279     $ 3,236,113   Customer B     2,526,869       2,796,310   Customer C     1,522,882       1,485,288   Customer D     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, 2021 and 2020 consist of:       2021     2020   Bonuses   $ 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   Audit fee     61,500       50,500   Reserve for outdated material     313,904       302,713   Sales rebates     56,857       149,346   Other     21,981       16,153   Total accrued expenses   $ 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, 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.   F-20   UNITED-GUARDIAN, INC.     NOTE I - RELATED PARTY TRANSACTIONS   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 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.                           F-21