UNITED GUARDIAN INC 10-K

Item 9A. Controls and Procedures.     (a) Evaluation of Disclosure Controls and Procedures   Our management, with the participation of our 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, 2022. On the basis of that evaluation, management concluded that our 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 our 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). Our internal control system is designed to provide reasonable assurance to management and to our Board of Directors regarding the preparation and fair presentation of published financial statements. Under the supervision and with the participation of management, including our Principal Executive Officer and Principal Financial Officer, management conducted an evaluation of the effectiveness of our 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 our internal control over financial reporting was effective as of December 31, 2022.   This Annual Report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Since we are a non-accelerated filer, management’s report is not subject to attestation by our 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.   20     UNITED-GUARDIAN, INC.     (c) Changes in Internal Control over Financial Reporting   There were no changes in our internal control over financial reporting in the fourth quarter of 2022 that materially affected, or would be reasonably likely to materially affect, our internal control over financial reporting.     (d) Limitations of the Effectiveness of Internal Controls     The effectiveness of our 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 our disclosure controls and procedures and internal control over financial reporting will detect all errors or fraud. However, our control systems have been designed to provide reasonable assurance of achieving their objectives, and our Principal Executive Officer and Principal Financial Officer have concluded that our 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.   PART III   Item 10. 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 2023 Proxy Statement.   CODE OF ETHICS   We have adopted a Code of Business Conduct and Ethics that applies to all of our officers, directors, and employees serving in any capacity, including the Chief Executive Officer and/or President, Chief Financial Officer, and Principal Accounting Officer. A copy of our Code of Business Conduct and Ethics is available on our website at http://www.u-g.com/corporate. If applicable, we intend to satisfy the disclosure requirement under Item 5.05 of Form 8-K relating to amendments to or waivers from any provision of our Code of Business Conduct and Ethics applicable to the Chief Executive Officer, Chief Financial Officer, and Principal Accounting Officer by posting this information on our website.   21     UNITED-GUARDIAN, INC.   AUDIT COMMITTEE   We have an Audit Committee (“Committee”) that is currently composed of three independent members of our Board of Directors, as well as an additional outside director that has expertise in both accounting and financial reporting, who acts as an advisor to the Committee. The members of the Committee are elected annually by the Board of Directors. The Committee was established for the purpose of assisting the Board of Directors in fulfilling its oversight responsibilities, including (a) overseeing our accounting and financial reporting processes, including preparation of financial statements and audits; (b) assuring compliance with all applicable legal, regulatory, and ethical responsibilities; (c) evaluating the qualifications and independence of our independent registered public accounting firm; and (d) assessing the effectiveness of our 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.   Item 11. Executive Compensation.   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 2023 Proxy Statement.   Item 12. 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 “Directors and Executive Officers” to be contained in the Company’s 2023 Proxy Statement.   Item 13. Certain Relationships and Related Transactions, and Director Independence.   The information required by this item is incorporated by reference to the section entitled “Directors and Executive Officers” to be contained in the Company’s 2023 Proxy Statement.   Item 14. Principal Accounting Fees and Services.   Audit Fees   The aggregate fees that have been billed by Baker Tilly US, LLP (“Baker Tilly”), our principal accountants, for the quarterly reviews of our financial statements for the first, second and third quarters of 2021 and the audit of our financial statements for the 2021 fiscal year were $90,500.   The aggregate fees that have been, or are expected to be, billed by Baker Tilly for the quarterly reviews of our financial statements for the first, second and third quarters of 2022 and the audit of our financial statements for the 2022 fiscal year are $97,000.   Audit-Related Fees   During 2022, there were no fees paid to Baker Tilly in connection with our 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 our financial statements and not reported under "Audit Fees" above.   22     UNITED-GUARDIAN, INC.   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 by Baker Tilly in 2022 or 2021.   PART IV   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.     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.           Date: March 16, 2023     By: /s/ Beatriz Blanco       Beatriz Blanco          President and Director                           23     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/ Beatriz Blanco   President (Principal Executive Officer); Director   March 16, 2023   Beatriz Blanco                     By: /s/ Andrea J. Young   Chief Financial Officer (Controller, Principal Financial Officer,   March 16, 2023   Andrea J. Young   and Principal Accounting Officer); Treasurer; Secretary                 By: /s/ Lawrence F. Maietta   Director; Advisor to the Audit Committee   March 16, 2023   Lawrence F. Maietta                     By: /s/ Arthur M. Dresner   Director; Chairman of the Audit Committee   March 16, 2023   Arthur M. Dresner                     By: /s/ Andrew A. Boccone   Director; Audit Committee member   March 16, 2023   Andrew A. Boccone                     By: /s/ S. Ari Papoulias   Director; Audit Committee member   March 16, 2023   S. Ari Papoulias                     By: /s/ Ken Globus   Chairman of the Board of Directors   March 16, 2023   Ken Globus               24     UNITED-GUARDIAN, INC.   EXHIBIT INDEX   Exhibit # Description 2.1 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) 3.1 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) 3.2 By-laws of the Company (Incorporated by reference to Exhibit 4.2 of the Registrant's Current Report on Form 8-K, dated September 21, 1987) 4.1 Specimen Certificate for shares of Common Stock of the Company (Incorporated by reference to Exhibit 4(a) of the Registrant's Annual Report on Form 10-K for the fiscal year ended February 29, 1988) 10.1 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) 10.2 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) 10.3 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) 10.4 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) 10.5 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) 10.6 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) 10.7** Employment agreement between Beatriz Blanco and the Company dated October 10, 2022 (Incorporated by reference to Exhibit 10.1 of the Registrant’s Current Report on Form 10-Q for the fiscal quarter ended September 30, 2022)     25     UNITED-GUARDIAN, INC.   10.8** Memorandum of Understanding (separation agreement) between Ken Globus and the Company effective November 1, 2022 (Incorporated by reference to Exhibit 10.2 of the Registrant’s Current Report on Form 10-Q for the fiscal quarter ended September 30, 2022) 14.1 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) 31.1* Certification pursuant to Section 302 of Sarbanes-Oxley Act of 2002 31.2* Certification pursuant to Section 302 of Sarbanes-Oxley Act of 2002 32* Joint certification pursuant to Section 906 of 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 Label Presentation Document 104*** Cover Page Interactive Data File (Embedded within the inline XBRL document and included in Exhibit 101.1).   * Filed herewith.   ** Management contract or compensatory arrangement.   *** XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended and otherwise is not subject to liability under these sections.       26       UNITED-GUARDIAN, INC.   INDEX TO FINANCIAL STATEMENTS (For the years ended December 31, 2022 and 2021)   Report of Baker Tilly U.S. LLP, Independent Registered Public Accounting Firm (PCAOB ID 23 ) 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-20               F-1     UNITED-GUARDIAN, INC.   REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM   To the shareholders and the board of directors of United-Guardian, Inc.:   Opinion on the Financial Statements   We have audited the accompanying balance sheets of United-Guardian, Inc. (the "Company") as of December 31, 2022 and 2021, 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, 2022 and 2021, 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.   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, 2023     F-2       UNITED-GUARDIAN, INC.   STATEMENTS OF INCOME       Years ended December 31,       2022     2021                     Net sales   $ 12,698,503     $ 13,929,629                     Costs and expenses:                 Cost of sales     5,996,376       5,747,931   Operating expenses     2,174,127       2,035,970   Research and development     490,770       478,642   Total costs and expenses     8,661,273       8,262,543   Income from operations     4,037,230       5,667,086   Other (loss) income:                 Investment income     236,695       233,857   Net loss on marketable securities     ( 1,046,245 )     ( 23,018 ) Total other (loss) income     ( 809,550 )     210,839                     Income before provision for income taxes     3,227,680       5,877,925                     Provision for income taxes     658,168       1,219,383   Net income   $ 2,569,512     $ 4,658,542                     Earnings per common share (basic and diluted)   $ 0.56     $ 1.01                     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,       2022     2021                     Current assets:                 Cash and cash equivalents   $ 830,452     $ 531,213   Marketable securities     5,653,516       7,635,463   Accounts receivable, net of allowance for doubtful accounts of $ 20,063 in 2022 and $ 20,252 in 2021     1,427,576       1,813,346   Inventories (net)     1,672,012       1,410,789   Prepaid expenses and other current assets     201,846       192,579   Prepaid income taxes     185,228       ---                     Total current assets     9,970,630       11,583,390                     Deferred income taxes, net     110,544       ---                     Property, plant, and equipment:                 Land     69,000       69,000   Factory equipment and fixtures     4,585,055       4,605,742   Building and improvements     2,895,742       2,853,718   Total property, plant and equipment     7,549,797       7,528,460                     Less accumulated depreciation     6,990,636       6,869,598   Total property, plant, and equipment, net     559,161       658,862                     TOTAL ASSETS   $ 10,640,335     $ 12,242,252     See Notes to Financial Statements               F-4     UNITED-GUARDIAN, INC.   BALANCE SHEETS   LIABILITIES AND STOCKHOLDERS' EQUITY       December 31,       2022     2021                     Current liabilities:                 Accounts payable   $ 30,415     $ 410,894   Accrued expenses     1,322,056       1,627,390   Deferred revenue     ---       190,164   Income taxes payable     ---       88,738   Dividends payable     21,220       20,575   Total current liabilities     1,373,691       2,337,761                     Deferred income taxes (net)     ---       83,222                     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, 2022 and 2021, respectively     459,432       459,432   Retained earnings     8,807,212       9,361,837   Total stockholders ’ equity     9,266,644       9,821,269   TOTAL LIABILITIES AND STOCKHOLDERS ’ EQUITY   $ 10,640,335     $ 12,242,252     See Notes to Financial Statements                 F-5       UNITED-GUARDIAN, INC.   STATEMENTS OF STOCKHOLDERS' EQUITY   Years ended December 31, 2022 and 2021         Common stock                     Shares Amount       Retained earnings     Total                                     Balance, January 1, 2021     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                                                                       Net income     ---       ---       2,569,512       2,569,512                                     Dividends declared, not paid ($ 0.68 per share)     ---       ---       ( 645 )     ( 645 )                                   Dividends declared and paid ($ 0.68 per share)     ---       ---       ( 3,123,492 )     ( 3,123,492 )                                   Balance, December 31, 2022     4,594,319     $ 459,432     $ 8,807,212     $ 9,266,644     See Notes to Financial Statements           F-6       UNITED-GUARDIAN, INC.   STATEMENTS OF CASH FLOWS       Years ended December 31,       2022     2021                     Cash flows from operating activities:                 Net income   $ 2,569,512     $ 4,658,542   Adjustments to reconcile net income to net cash provided by operating activities:                 Depreciation and amortization     135,396       145,977   Loss (gain) on sale of asset     2,445       ( 14,799 ) Net loss on marketable securities     1,046,245       23,018   Allowance for doubtful accounts     ( 189 )     6,235   Reserve for inventory obsolescence     29,000       ---   Deferred income taxes     ( 193,766 )     ( 68,462 ) Decrease (increase) in operating assets:                 Accounts receivable     385,959       ( 431,883 ) Inventories     ( 290,223 )     4,984   Prepaid expenses and other current assets     ( 9,267 )     ( 31,371 ) Prepaid income taxes     ( 185,228 )     99,107   (Decrease) increase in operating liabilities:                 Accounts payable     ( 380,479 )     379,094   Accrued expenses     ( 305,334 )     263,933   Deferred revenue     ( 190,164 )     190,164   Income taxes payable     ( 88,738 )     88,738   Net cash provided by operating activities     2,525,169       5,313,277                     Cash flows from investing activities:                 Acquisitions of property, plant and equipment     ( 75,179 )     ( 116,375 ) Proceeds from sale of asset     37,039       ---   Purchases of marketable securities     ( 1,931,969 )     ( 4,219,760 ) Proceeds from sales of marketable securities     2,867,671       4,152,660   Net cash provided by (used in) investing activities     897,562       ( 183,475 )                   Cash flows from financing activities:                 Dividends paid     ( 3,123,492 )     ( 5,190,033 ) Net cash used in financing activities     ( 3,123,492 )     ( 5,190,033 )                   Net increase (decrease) in cash and cash equivalents     299,239       ( 60,231 ) Cash and cash equivalents, beginning of year     531,213       591,444   Cash and cash equivalents, end of year   $ 830,452     $ 531,213                     Supplemental disclosure of cash flow information                 Taxes paid   $ 1,125,000     $ 1,100,000                     Supplemental disclosure of non-cash items:                 Dividends payable   $ 645     $ 1,547   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 92 % and 93 % of the Company’s sales for the years ended December 31, 2022 and December 31, 2021, respectively. Lubrajel accounted for approximately 59 % and 64 % of the Company’s sales for the years ended December 31, 2022 and December 31, 2021, respectively, and Renacidin accounted for approximately 33 % and 29 % of the Company’s sales for the years ended December 31, 2022 and December 31, 2021, respectively.   Impact of the Coronavirus Pandemic, Global Supply Chain Instability and Inflation   While the coronavirus pandemic continues to impact certain areas of the Company’s operations, the current impact on the Company’s financial performance is coming primarily from 1 ) higher raw material costs and increased shipping costs, which had an impact on the Company’s gross profit margins during 2022 and 2 ) a decrease in cosmetic ingredient sales in China due to China’s zero -COVID mandate that was in effect for a substantial part of 2022.   The pandemic did not affect the Company’s ability to obtain raw materials but due to supply chain instability, the Company experienced longer lead times and higher prices for many of its raw materials. The increased raw material prices had an impact on the Company’s gross profit margins in 2022 and may continue to have an impact on gross profit margins in upcoming quarters. In response to the rising raw material prices the Company has instituted price increases on many of its products, which will help to reduce the impact on the Company’s gross margins in the future.   As a result of the lingering effects of the coronavirus pandemic as described above, combined with global supply chain instability, there continues to be uncertainty in regard to its future potential impact on the Company’s operations or financial results. The Company believes that it is still unable to provide an accurate estimate or projection as to what the future impact of the pandemic will be on its future operations or financial results.   While it is unknown whether inflation will continue to increase or will begin to decrease during 2023, continued inflation is likely to result in further increases in raw material costs, shipping costs, and internal labor costs, which could impact the Company’s results of operations.   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.   F- 8     UNITED-GUARDIAN, INC.   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, 2022 and 2021, the allowance for doubtful accounts receivable amounted to $ 20,063 and $ 20,252 , 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, 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 2022 and 2021, 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. 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 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.   F- 9     UNITED-GUARDIAN, INC.   Any allowances for returns are taken as a reduction of sales within the same period the revenue is recognized. Such allowances are determined based on historical experience under ASC Topic 606 - 10 - 32 - 8. At December 31, 2022 and 2021, the Company had an allowance of $ 369,154 and $ 313,904 , respectively, for possible outdated material returns, which is included in accrued expenses.   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 was recorded as deferred revenue on the balance sheet. The related performance obligation associated with this payment was satisfied in the first quarter of 2022. No such advanced payment exists at December 31, 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 are as follows:       Years ended December 31,       2022     2021                     Cosmetic ingredients   $ 5,167,909     $ 6,872,714   Pharmaceuticals     4,943,605       4,735,324   Medical lubricants     2,470,163       2,171,204   Industrial and other     116,826       150,387   Total Net Sales   $ 12,698,503     $ 13,929,629     The Company’s cosmetic ingredients are currently marketed worldwide by five distributors, of which the United States (“U.S.”)-based ASI purchases the largest volume. For the years ended December 31, 2022 and 2021, approximately 25 % and 20 %, respectively, of the Company’s sales were to (a) its foreign-based distributors (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 lubricants sold directly by the Company.   Disaggregated sales by geographic region are as follows:       Years ended December 31,       2022     2021                     United States*   $ 9,537,124     $ 11,159,341   Other countries     3,161,379       2,770,288   Net Sales   $ 12,698,503     $ 13,929,629     * 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, 66 % of ASI’s sales in 2022 were to customers in foreign countries, compared with 74 % in 2021. ASI’s largest foreign market in both 2022 and 2021 was China, which accounted for approximately 38 % of ASI’s sales in 2022 and 42 % of sales in 2021.     F- 10     UNITED-GUARDIAN, INC.   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, 2022, approximately $ 105,000 exceeded the FDIC limit.   Dividends   On May 10, 2022, the Company’s Board of Directors declared a semi-annual cash dividend of $ 0.37 per share, which was paid on June 1, 2022 to all stockholders of record as of May 23, 2022. On November 15, 2022, the Company’s Board of Directors declared a semi-annual cash dividend of $ 0.31 per share, which was paid on December 7, 2022, to all stockholders of record as of November 28, 2022. In 2022, the Company declared a total of $ 3,124,137 in dividends, of which $ 3,123,492 was paid. The balance of $ 645 is payable to stockholders whose old Guardian Chemical shares have not yet been exchanged to United-Guardian, Inc. shares and are pending escheatment.   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 Chemical 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 2022 and 2021, 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.   F- 11     UNITED-GUARDIAN, INC.   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   5 - 7 years              Building 40 years   Building improvements   Lesser of useful life or 20 years   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, 2022 and 2021.   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, 2022, four of the Company’s pharmaceutical wholesalers and cosmetic ingredient distributors accounted for approximately 72 % of the Company’s gross sales during the year and approximately 81 % of its outstanding accounts receivable at December 31, 2022. For the year ended December 31, 2021, the same four pharmaceutical wholesalers and cosmetic ingredient distributors accounted for a total of approximately 75 % of the Company’s gross sales during the year and 80 % of its outstanding accounts receivable at December 31, 2021.   F- 12     UNITED-GUARDIAN, INC.   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. During 2022, the Company periodically experienced longer lead times due to shipping delays and supply chain issues related to the pandemic. The Company has six major raw material vendors that collectively accounted for approximately 90 % and 94 % of the raw material purchases by the Company in 2022 and 2021, respectively.   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, 2022 and 2021, 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, 2022 and 2021, the Company did not record any tax-related interest or penalties. The Company’s tax returns for 2019 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 $ 97,000 and $ 82,000 for the years ended December 31, 2022 and 2021, respectively.   Advertising Expenses   Advertising costs are expensed as incurred. For the years ended December 31, 2022 and 2021, the Company incurred approximately $ 19,000 and $ 31,000 , respectively, in advertising expense, which primarily relates to the internet marketing of Renacidin, one of the Company’s pharmaceutical products.   F- 13     UNITED-GUARDIAN, INC.   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   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 does not expect that the implementation of this standard will have a material effect on its’ financial statements.     NOTE B – CASH AND CASH EQUIVALENTS   Cash and cash equivalents include currency on hand, demand deposits with banks or financial institutions, and short-term, highly liquid investments that are both readily convertible to known amounts of cash and so near their maturity that they present minimal risk of changes in value because of changes in interest rates. The following table summarizes the Company’s cash and cash equivalents:       Years ended December 31,       2022     2021                     Demand Deposits   $ 333,275     $ 531,213   U.S. Treasury Bills (original 2-month maturity)     497,177       ---   Total cash and cash equivalents   $ 830,452     $ 531,213       NOTE C - 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, 2022 and 2021 are as follows:       Years ended December 31,          2022     2021                 Net losses recognized during the year on marketable securities   $ ( 1,046,245 )   $ ( 23,018 ) Less: Net losses (gains) realized during the year on marketable securities sold during the period     364,074       ( 111,917 )   Net unrealized loss recognized during the reporting year on marketable securities still held at the reporting date   $ ( 682,171 )   $ ( 134,935 )     F- 14     UNITED-GUARDIAN, INC.   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:   December 31, 2022                       Unrealized       Cost     Fair Value     (Loss)Gain                             Equity Securities                         Fixed income mutual funds   $ 5,449,227     $ 4,924,497     $ ( 524,730 ) Equity and other mutual funds     717,165       729,019       11,854   Total equity securities     6,166,392       5,653,516       ( 512,876 ) Total marketable securities   $ 6,166,392     $ 5,653,516     $ ( 512,876 )   December 31, 2021                       Unrealized          Cost     Fair Value     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     7,466,168       7,635,463       169,295   Total marketable securities   $ 7,466,168     $ 7,635,463     $ 169,295     Investment income is recognized when earned and consists principally of dividend income from equity and fixed income mutual funds and interest income on United States Treasury Bills. 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 $ 2,867,671 for the year ended December 31, 2022, which included realized losses of $ 364,074 . Proceeds from the sale and redemption of marketable securities for the year ended December 31, 2021 amounted to $ 4,152,660 , which included realized gains of $ 111,917 .     F- 15     UNITED-GUARDIAN, INC.     NOTE D – INVENTORIES     Inventories consist of the following:       December 31,       2022     2021                     Raw materials   $ 601,125     $ 494,348   Work in process     16,520       119,069   Finished products     1,054,367       797,372   Total Inventories   $ 1,672,012     $ 1,410,789     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, 2022 and December 31, 2021 are net of a reserve of $ 64,000 and $ 35,000 , respectively.     NOTE E – INCOME TAXES   The provision for income taxes consists of the following:       Years ended December 31,   Current   2022     2021   Federal   $ 850,344     $ 1,287,749   State     1,590       96   Total current provision for income taxes     851,934       1,287,845     Deferred                 Federal     ( 193,766 )     ( 68,462 ) State     ---       ---   Total deferred benefit from income taxes     ( 193,766 )     ( 68,462 )                   Total provision for income taxes   $ 658,168     $ 1,219,383     The following is a reconciliation of the Company’s effective income tax rate to the Federal statutory rate:                Years ended December 31,       2022     2021         ($)     Tax rate       ($)     Tax rate                                     Income taxes at statutory federal income tax rate   $ 677,813       21.0 %   $ 1,234,364       21.0 % State taxes, net of federal benefit     1,256       ---       76       ---   Research & development credits     ( 10,000 )     ( 0.3 )     ( 10,000 )     ( 0.2 ) Non-taxable dividends     ( 6,300 )     ( 0.2 )     ( 2,923 )     ( 0.1 ) Other, net     ( 4,601 )     ( 0.1 )     ( 2,134 )     ---   Provision for income taxes   $ 658,168       20.4 %   $ 1,219,383       20.7 %   F- 16     UNITED-GUARDIAN, INC.   The tax effects of temporary differences which comprise the deferred tax assets and liabilities are as follows:       December 31, .       2022     2021                     Deferred tax assets                 Allowance for doubtful accounts   $ 4,213     $ 4,253   Inventories     13,440       7,350   Accounts payable     6,367       86,288   R&D expenses     92,756       ---   Unrealized loss on marketable securities     107,704       ---   Accrued expenses     277,326       339,884   Total deferred tax assets   $ 501,806     $ 437,775   Deferred tax liabilities                 Accounts receivable     ( 304,004 )     ( 385,056 ) Prepaid expenses     ( 42,446 )     ( 38,918 ) Depreciation on property, plant and equipment     ( 44,812 )     ( 61,471 ) Unrealized gain on marketable securities     ---       ( 35,552 ) Total deferred tax liabilities     ( 391,262 )     ( 520,997 ) Net deferred tax asset (liability)   $ 110,544     $ ( 83,222 )     NOTE F - 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 $ 81,000 and $ 80,000 for the years ended December 31, 2022 and 2021, 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, 2022 and 2021, respectively, the Company’s Board of Directors authorized discretionary contributions in the amount of $ 109,000 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 2022 will be paid in February 2023. The amount paid in February 2023 has been reduced by an amount paid to Ken Globus upon his retirement from the Company during 2022. The remaining contribution payable is included in accrued expenses at December 31, 2022.     NOTE G - 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.   F- 17     UNITED-GUARDIAN, INC.   The Company operates in one business segment. The Company’s products are separated into four distinct product categories: cosmetic ingredients, pharmaceuticals, medical lubricants, and industrial products. Each product category is marketed differently. The cosmetic ingredients are marketed through a global network of distributors. These distributors 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 distributors 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.   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 include a urological product and a topical bioticide 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. 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 lubricants 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 companies that market 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 Company plans on discontinuing the sales of its industrial products in the second quarter of 2023.   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 “The United States” sales revenue because all shipments to Customer A are delivered to Customer A's warehouses in the U.S.   F- 18     UNITED-GUARDIAN, INC.   In addition, there are four customers for the Company’s medical lubricants 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 “The United States” revenue number in the table below.     (a) Net Sales         Years ended December 31,         2022       2021                      Cosmetic Ingredients   $ 5,388,365     $ 6,872,714   Pharmaceuticals     5,929,216       5,748,244   Medical Lubricants     2,471,555       2,175,822   Industrial and other     116,826       150,387   Gross Sales     13,905,962       14,947,167   Less: Discounts and allowances     ( 1,207,459 )     ( 1,017,538 ) Net Sales   $ 12,698,503     $ 13,929,629       (b) Geographic Information       Years ended December 31,       2022     2021                     United States   $ 9,537,124     $ 11,159,341   Other countries     3,161,379       2,770,288   Net Sales   $ 12,698,503     $ 13,929,629       (c) Gross Sales to Major Customers         Years ended December 31,       2022     2021                     Customer A   $ 4,284,799     $ 5,641,279   Customer B     2,527,743       2,526,869   Customer C     1,613,597       1,522,882   Customer D     1,553,885       1,488,301   All other customers     3,925,938       3,767,836   Total Gross Sales   $ 13,905,962     $ 14,947,167       NOTE H - ACCRUED EXPENSES   Accrued expenses at December 31, 2022 and 2021 consist of:       2022     2021                     Bonuses   $ 175,496     $ 348,000   Distribution fees     395,536       359,550   Payroll and related expenses     53,475       292,560   Company 401(k) contribution     94,326       109,000   Annual report expenses     68,349       64,038   Audit fee     66,500       61,500   Reserve for outdated material returns     369,154       313,904   Sales rebates     80,926       56,857   Other     18,294       21,981   Total accrued expenses   $ 1,322,056     $ 1,627,390       F- 19     UNITED-GUARDIAN, INC.     NOTE I - SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION AND  NON-CASH INVESTING AND FINANCING ACTIVITIES   As of December 31, 2022, the Company had a number of unconverted Guardian Chemical shares that would convert to approximately 447 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 447 shares that have not yet been exchanged or designated for escheatment as of December 31, 2022, and the Company will continue to do so as dividends are declared.     NOTE J - RELATED PARTY TRANSACTIONS   During the years ended December 31, 2022 and 2021, the Company paid PKF O’Connor Davies $ 14,500 and $ 19,500 , respectively, for accounting and tax services. Lawrence Maietta, a partner at PKF O’Connor Davies, is a director of the Company.   For the year ended December 31, 2022, the Company paid Ken Globus, the Company’s previous President and CEO, $ 20,000 for consulting services subsequent to his departure from the Company. The Company’s consulting agreement with Ken Globus expires on May 31, 2023. Ken Globus is a director of the Company and currently serves as Chairman of the Board of Directors. In addition, in November 2022, Ken Globus purchased a used vehicle from the Company for $ 37,039 .                           F-20