# United Guardian Inc: Form 10-Q for the period ended Mar 31, 2025

- Company: [United Guardian Inc](/companies/ug.md) (CIK 101295)
- Form: 10-Q
- Filed: 2025-05-13
- Accepted by EDGAR: May 13, 2025, 09:01 ET
- Period: 2025-03-31
- Accession: 0001171843-25-003113
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/101295/000117184325003113/ug20250515_10q.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/101295/000117184325003113/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2025-03-31.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2025-01-01 to 2025-03-31 | $2.5m | us-gaap:RevenueFromContractWithCustomerIncludingAssessedTax |
| Cost of revenue | 3 months, 2025-01-01 to 2025-03-31 | $1.1m | us-gaap:CostOfGoodsAndServicesSold |
| Research and development | 3 months, 2025-01-01 to 2025-03-31 | $114.4k | us-gaap:ResearchAndDevelopmentExpense |
| Operating income | 3 months, 2025-01-01 to 2025-03-31 | $610.9k | us-gaap:OperatingIncomeLoss |
| Income tax | 3 months, 2025-01-01 to 2025-03-31 | $147.1k | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2025-01-01 to 2025-03-31 | $560.9k | us-gaap:NetIncomeLoss |
| Basic EPS | 3 months, 2025-01-01 to 2025-03-31 | $0.12 | us-gaap:EarningsPerShareBasic |
| Operating cash flow | 3 months, 2025-01-01 to 2025-03-31 | $322.1k | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 3 months, 2025-01-01 to 2025-03-31 | $3.6k | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Dividends paid | 3 months, 2025-01-01 to 2025-03-31 | $1.6m | us-gaap:PaymentsOfDividends |
| Cash and equivalents | at 2025-03-31 | $1.3m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2025-03-31 | $11.7m | us-gaap:AssetsCurrent |
| Total assets | at 2025-03-31 | $12.8m | us-gaap:Assets |
| Current liabilities | at 2025-03-31 | $1.9m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2025-03-31 | $1.9m | us-gaap:Liabilities |
| Shareholders' equity | at 2025-03-31 | $10.8m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 13,976 characters.

### FORWARD-LOOKING STATEMENTS

*You should read the following discussion and analysis in conjunction with our financial statements and related notes contained elsewhere in this Annual Report. This discussion contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of a variety of factors discussed in this report and those discussed in other documents we file with the SEC. In light of these risks, uncertainties and assumptions, readers are cautioned not to place undue reliance on such forward-looking statements. These forward-looking statements represent beliefs and assumptions as of the date of this report. While we may elect to update forward-looking statements at some point in the future, we specifically disclaim any obligation to do so, even if our estimates change. Past performance does not guarantee future results.*

### EXECUTIVE LEVEL OVERVIEW

We specialize in manufacturing cosmetic ingredients, pharmaceuticals, medical lubricants, and sexual wellness ingredients through our Guardian Laboratories division. With a long-standing reputation for delivering high-quality specialty products, we are committed to serving diverse markets with innovative solutions.

As part of our strategic focus, in October 2023, we took a significant step toward expanding our presence in the sexual wellness market by partnering with Brenntag Specialties, a global leader in chemicals and ingredients distribution. Under this agreement, Brenntag will market and distribute our new Natrajel line of sexual wellness ingredients across North and South America. While we reported no sales of this product in 2024, we anticipate beginning manufacturing and revenue generation in 2025.

We have also expanded our relationship with Azelis Group NV (“Azelis”), our distributor in the United Kingdom (“UK”) and Ireland. We added a new territory, South Korea, for personal care in February of 2025 and expanded the UK and Ireland territories to include the medical market. We have been strategically making changes to expand our presence for our medical lubricants, and this is the first step in that process.

With a refined product portfolio and strategic partnerships, we are well-positioned for future growth, leveraging our expertise in specialty ingredients to capitalize on emerging market opportunities.

### CRITICAL ACCOUNTING POLICIES

As disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, the discussion and analysis of our financial condition and results of operations are based on its financial statements, which have been prepared in conformity with US GAAP. The preparation of those financial statements required us to make estimates and assumptions that affect the carrying value of assets, liabilities, revenues, and expenses reported in those financial statements. Those estimates and assumptions can be subjective and complex, and consequently, actual results could differ from those estimates and assumptions. Our most critical accounting policies relate to revenue recognition, concentration of credit risk, investments, inventory, and income taxes. Since December 31, 2024, there have been no significant changes to the assumptions and estimates related to those critical accounting policies.

The following discussion and analysis covers material changes in our financial condition since the year ended December 31, 2024, and a comparison of the results of operations for the three months ended March 31, 2025 and March 31, 2024. This discussion and analysis should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.

All references in this quarterly report to “sales” or “Sales” shall mean Net Sales unless specified otherwise.

In accordance with ASU-2016-13, we recognize an allowance for credit losses for financial assets carried at amortized cost to present the net amount expected to be collected as of the balance sheet date. Such allowance is based on the credit losses expected to arise over the life of the asset.

### RESULTS OF OPERATIONS

### Net Sales

Net sales for the first quarter of 2025 decreased by $773,817 (approximately 24%) as compared with the first quarter of 2024. The decrease in sales for the first quarter of 2025 was primarily attributable to a decrease in sales of our Lubrajel® line of cosmetic ingredients, which was partially offset by an increase in sales of our pharmaceutical and medical products. The changes in our sales by product line are as follows:

(a) **Cosmetic Ingredients**: Sales of our cosmetic ingredients decreased by $1,177,484 (approximately 63%) in the first quarter of 2025 compared with the same period in 2024. The decrease was primarily attributable to a decrease in purchases of cosmetic ingredients by ASI, whose purchases decreased by $1,301,343 (approximately 74%) compared with the same period in 2024. This decrease was offset by an increase in sales to our four other distributors of $120,728 (approximately 101%), and an increase in sales to two direct cosmetic ingredient customers located in the United States of $3,132 (approximately 129%).

Based on information received from ASI, the decrease in sales to ASI was due to (a) an excess of inventory being held in China that had to be worked off, and (b) the timing of product orders. ASI has confirmed that currently there has been no significant loss of business or customers.

The Company continues to experience global competition, particularly from Asian companies that manufacture and sell products that are competitive with the Company’s products. These competitive products are usually sold at a lower price than our products; however, they may not compare favorably to the level of performance and quality of our products. The Company expects the Asian market to remain very competitive based on the continuing competition from lower-cost competitors, and for that reason we are concentrating our R&D efforts on developing new and unique products that other companies do not offer.

Refer to Item 1A. “Risk Factors” for more information regarding the impact of potential tariffs on sales of our cosmetic ingredients.

(b) **Pharmaceutical Products**: Because there are fees, rebates, and allowances associated with sales of the Company’s two pharmaceutical products, Renacidin and Clorpactin® WCS-90, discussion of pharmaceutical sales includes references to both *gross sales* (before fees, rebates and allowances) and *net sales* (after fees, rebates, and allowances). *Net* sales of our two pharmaceutical products, Renacidin and Clorpactin WCS-90, together increased from $950,323 in the first quarter of 2024 to $1,168,458 in the first quarter of 2025, (approximately 23%). Gross sales of both products increased from $1,086,669 in the first quarter of 2024 to $1,367,979 in the first quarter of 2025 (approximately 26%).

The increase in sales was primarily due to a continued increase in gross sales of Renacidin, which increased from $891,789 in the first quarter of 2024 to $1,232,396 (approximately 38%) in the first quarter of 2025. This increase was primarily due to the fact that in the first quarter of 2024 the Company was not able to fill full orders of Renacidin due to the temporary shutdown of production at our contract manufacturer’s facility, which began in the fourth quarter of 2023. As a result of this shutdown, we were forced to allocate our existing stock of Renacidin in order to maintain sufficient supply levels to fill customer orders. Sales of Renacidin remained on allocation until late March of 2024, when we received product in sufficient quantities to fill customers’ orders in full. The increase in gross sales of Renacidin was offset by a decrease in sales of Clorpactin, which decreased from $194,880 to $135,583 a decrease of approximately 30%.

The difference in the net sales increase compared with the gross sales increase for these products was due to a combination of 1) a net increase in gross sales of those products, combined with 2) an increase in pharmaceutical sales allowances of $63,176 (approximately 46%), compared with the same period in 2024. The increase in sales allowances was primarily due to an increase in sales discounts and VA chargebacks.

(c) **Medical Lubricants**: Sales of the Company’s medical lubricants increased by $185,532 (approximately 43%) for the first quarter of 2025 when compared with the same period in 2024. The increase was due to an increase in orders from two of our medical customers, one located in India and the other in China.

Refer to Item 1A. “Risk Factors” for more information regarding the impact of potential tariffs on sales our medical lubricants.

### Cost of Sales

Cost of sales as a percentage of net sales for the first quarter of 2025 decreased to 45%, compared with 48% for the first quarter of 2024. The decrease was due primarily to the fact that in the first quarter of 2024 the cost of sales associated with the products sold carried a higher per-unit overhead rate than the products sold in the first quarter of 2025.

### Operating Expenses

Operating expenses, consisting of selling, general, and administrative expenses, increased by $63,870 (approximately 11%) for the first quarter of 2025 compared with the first quarter of 2024. The increase was mainly due to increases in sales & marketing expenses and payroll and payroll related expenses.

### Research and Development Expenses

R&D expenses increased by $11,412 (approximately 11%) for the first quarter of 2025 compared with the first quarter of 2024. The increase was primarily due to an increase in payroll and payroll-related expenses.

### Investment Income

Investment income decreased by $13,386 (approximately 14%) for the first quarter of 2025 compared with the first quarter of 2024. The decrease was primarily due to a decrease in interest income from United States Treasury Bills during the first quarter of 2025 compared with the same period in 2024. This was the result of a combination of lower interest rates in the first quarter of 2025 compared with the same period in 2024, and a decrease in the holdings of U.S. Treasury Bills in the first quarter of 2025 due to increased cash requirements.

### Net Gain on Marketable Securities

The net gain on marketable securities decreased from $41,496 for the quarter ended March 31, 2024, to $12,350 for the quarter ended March 31, 2025. The decrease was primarily due to a change in the market value of our equity mutual funds of $13,857. Our management team and Board of Directors are continuing to closely monitor our investment portfolio and have made and will continue to make any changes they believe may be necessary or appropriate to minimize the future impact on our financial position that the volatility of the global financial markets may have.

### Provision for Income Taxes

The Company's effective income tax rate was approximately 21% for the first quarter of 2025 and 2024 and is expected to remain at 21% for the current fiscal year.

### LIQUIDITY AND CAPITAL RESOURCES

Working capital decreased by $987,304 to $9,763,778 at March 31, 2025, down from $10,751,082 at December 31, 2024. The current ratio decreased to 6.1 to 1 at March 31, 2025, down from 6.6 to 1 at December 31, 2024. The decreases in working capital and the current ratio were primarily due to a decrease in cash, cash equivalents and marketable securities.

The Company believes that its working capital is, and will continue to be, sufficient to support its operating requirements for at least the next twelve months. The Company’s long-term liquidity position will be dependent on its ability to generate sufficient cash flow from profitable operations.

The Company is in the final stages of upgrading its building sprinkler system and has incurred costs of $184,298 to date and expects to incur additional costs of $10,814 during the second quarter of 2025. The project is expected to be completed during the second quarter of 2025.

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

The Company generated cash from operations of $322,080 and $644,120 for the three months ended March 31, 2025 and 2024, respectively. The decrease was due primarily to a decrease in net income.

Cash provided by investing activities for the three months ended March 31, 2025 was $679,370. Cash used in investing activities for the three months ended March 31, 2024 was $665,478. The increase was primarily due to an increase in net proceeds from the sale of marketable securities in the first quarter of 2025 compared with the first quarter of 2024. The dividend payment we made in the first quarter of 2025 required the liquidation of some of our CD’s and U.S. Treasury Bills.

Net cash used in financing activities was $1,607 893 and $1,148,468 for the quarters ended March 31, 2025 and 2024, respectively. The increase in cash used in financing activities was due to the payment of higher dividends in the first quarter of 2025 compared to the same period in 2024. We declared dividends of $0.35 per share in the first quarter of 2025, compared to $0.25 per share in the first quarter of 2024.

We expect to continue to use our cash to make dividend payments, purchase marketable securities, and take advantage of growth opportunities that may arise that are in the best interest of the Company and its shareholders.

### CONTRACTUAL OBLIGATIONS AND COMMITMENTS

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

## Controls and procedures

As filed, 2,055 characters.

(a) DISCLOSURE CONTROLS AND PROCEDURES

The Company’s management, including its Principal Executive Officer and Principal Financial Officer, has evaluated the design, operation, and effectiveness of the Company’s disclosure controls and procedures pursuant to Rule 13a-15 under the Securities Exchange Act of 1934 (the “Exchange Act”). There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives. Based upon the evaluation performed by the Company’s management, including its Principal Executive Officer and Principal Financial Officer, it was determined that, as of the end of the period covered by this quarterly report, the Company’s disclosure controls and procedures were effective in providing reasonable assurance that information required to be disclosed in the 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 the Company’s management, including its Principal Executive Officer and Principal Financial Officer, or persons performing similar functions, as appropriate, to allow timely decisions regarding disclosures.

(b) CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

The Company's Principal Executive Officer and Principal Financial Officer have determined that, during the period covered by this quarterly report, there were no changes in the Company's internal control over financial reporting that materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting. They have also concluded that there were no significant changes in the Company’s internal controls after the date of the evaluation.

## Risk factors

As filed, 2,751 characters.

Impact of Global Supply Chain Instability, Inflation and Tariffs: We are actively monitoring trade policy and tariff announcements including the recent executive orders issued by executive branch of the U.S. federal government regarding tariffs on imports from various countries, with a focus on China as those tariffs have the greatest potential to significantly impact our business. In addition, we are monitoring the potential impact of actions taken by these countries in response to the announced tariffs. A significant amount of our cosmetic ingredient and medical lubricant sales are reliant on shipments to China. If significant tariffs or other restrictions are placed on Chinese imports or any countermeasures are taken by China, our business, financial condition or results of operations could be materially and adversely affected. Such tariffs may make our products less cost competitive and reduce gross margins, especially in China, where we face significant competition from Asian companies that manufacture and sell products that are competitive with our products. Furthermore, we may not be able to increase our prices for our products sufficiently enough to offset these tariffs and if we raise prices in response to these tariffs, demand for our products in certain regions may be reduced.

Many of our products are used in the formulation of finished products that are manufactured in China and then imported back into the U.S. for sale. There is the possibility that the tariffs levied on these finished products could result in an increase in their price, which could potentially impact demand for these products in the U.S. and possibly have a negative effect on the purchases of our products.

We source products through numerous suppliers, many of whom have established long-term relationships with us. While we obtain most of our raw materials and lab supplies from domestic sources, we have three suppliers that obtain their raw materials from China. These materials are not purchased by us in large quantities, and we have adequate stock on hand to cover the next six months. In addition, we have one direct raw material supplier in China; however, the raw materials we purchase from this supplier are not in large quantities and the effect of this tariff would not materially impact the pricing of our products.

At this time, the overall impact on our business related to these or any other tariffs that may be imposed, remains uncertain and depends on multiple factors, including the duration and expansion of current tariffs, future changes to tariff rates, scope or enforcement, retaliatory measures by impacted trade partners, inflationary effects, and the effectiveness of our responses in managing these challenges.

Filed May 13, 2025.
Source: SEC EDGAR, the filing index for accession 0001171843-25-003113. Last ingested by Listed: Oct 24, 2026, 14:54 ET. No prices; not investment advice.