# United Guardian Inc: Form 10-Q for the period ended Jun 30, 2025

- Company: [United Guardian Inc](/companies/ug.md) (CIK 101295)
- Form: 10-Q
- Filed: 2025-08-08
- Accepted by EDGAR: Aug 8, 2025, 09:01 ET
- Period: 2025-06-30
- Accession: 0001171843-25-005207
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/101295/000117184325005207/ug20250630_10q.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/101295/000117184325005207/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2025-06-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2025-04-01 to 2025-06-30 | $2.8m | us-gaap:RevenueFromContractWithCustomerIncludingAssessedTax |
| Revenue | 6 months, 2025-01-01 to 2025-06-30 | $5.3m | us-gaap:RevenueFromContractWithCustomerIncludingAssessedTax |
| Cost of revenue | 3 months, 2025-04-01 to 2025-06-30 | $1.3m | us-gaap:CostOfGoodsAndServicesSold |
| Cost of revenue | 6 months, 2025-01-01 to 2025-06-30 | $2.5m | us-gaap:CostOfGoodsAndServicesSold |
| Research and development | 3 months, 2025-04-01 to 2025-06-30 | $107.9k | us-gaap:ResearchAndDevelopmentExpense |
| Research and development | 6 months, 2025-01-01 to 2025-06-30 | $222.3k | us-gaap:ResearchAndDevelopmentExpense |
| Operating income | 3 months, 2025-04-01 to 2025-06-30 | $695.5k | us-gaap:OperatingIncomeLoss |
| Operating income | 6 months, 2025-01-01 to 2025-06-30 | $1.3m | us-gaap:OperatingIncomeLoss |
| Income tax | 3 months, 2025-04-01 to 2025-06-30 | $163.8k | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 6 months, 2025-01-01 to 2025-06-30 | $310.8k | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2025-04-01 to 2025-06-30 | $626.8k | us-gaap:NetIncomeLoss |
| Net income | 6 months, 2025-01-01 to 2025-06-30 | $1.2m | us-gaap:NetIncomeLoss |
| Basic EPS | 3 months, 2025-04-01 to 2025-06-30 | $0.14 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 6 months, 2025-01-01 to 2025-06-30 | $0.26 | us-gaap:EarningsPerShareBasic |
| Operating cash flow | 6 months, 2025-01-01 to 2025-06-30 | $625.3k | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 6 months, 2025-01-01 to 2025-06-30 | $21.2k | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Dividends paid | 6 months, 2025-01-01 to 2025-06-30 | $1.6m | us-gaap:PaymentsOfDividends |
| Cash and equivalents | at 2025-06-30 | $1.8m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2025-06-30 | $12.5m | us-gaap:AssetsCurrent |
| Total assets | at 2025-06-30 | $13.4m | us-gaap:Assets |
| Current liabilities | at 2025-06-30 | $1.9m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2025-06-30 | $1.9m | us-gaap:Liabilities |
| Shareholders' equity | at 2025-06-30 | $11.5m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 15,603 characters.

The following discussion and analysis cover material changes in the financial condition of the Company since the year ended December 31, 2024, and a comparison of the results of operations for the second quarter of 2025 and 2024 and the first half of 2025 and 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 specifically identified as “gross sales.”

### 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 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 began marketing and distributing our new Natrajel line of sexual wellness ingredients in the United States, Canada, Mexico, Central America, and South America. While we reported no sales of this product in 2024, we anticipate beginning manufacturing and revenue generation in the second half of 2025.

We have also expanded our relationship with Azelis Group NV (“Azelis”), our distributor in the United Kingdom (“UK”) and Ireland. The first step was expanding Azelis’s distribution to include our medical products in the UK and Ireland territories. In addditiona, we have added South Korea as a new territory for our personal care product line.

With a strong and growing product portfolio, we are now pursuing an active strategy to significantly expand our distribution channels for all our products as well as new market segments globally.

### 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 our 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 cover material changes in our financial condition since the year ended December 31, 2024, and a comparison of the results of operations for the three and six months ended June 30, 2025 and June 30, 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 our 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 second quarter of 2025 decreased by $551,980 (16%) when compared with the same period in 2024. Net sales for the first half of 2025 decreased by $1,325,797 (20%) as compared with the corresponding period in 2024. The decrease in sales for the second quarter of 2025 and the first half of 2025 were attributable to changes in sales of the following product lines:

### Cosmetic ingredients:

**(a) Second quarter sales**: For the second quarter of 2025, sales of our cosmetic ingredients decreased by $522,825 (37%) when compared with the second quarter of 2024. The decrease was due primarily to a net decrease of $556,243 (42%) in sales of the Company’s cosmetic ingredients to ASI when compared with the second quarter of 2024. Based on information provided by ASI, the decrease in sales was due to two main factors: 1) five significant customers in China for the Company’s products experienced softer demand in the second quarter due to concerns regarding trade uncertainty and tariffs. The tariffs imposed on our products entering China have put increased pressure on us to remain competitive in the Asian markets; and 2) Ashland is currently working off excess inventory of some of our products, which reduced their orders from us during the second quarter of 2025.

Second quarter sales to the Company’s four other distributors, as well as two direct cosmetic ingredient customers, increased by a net of $33,418 (33%) compared with the second quarter of 2024. The increase was attributable to sales increases of $54,547 to the Company’s distributors in France, Italy, and Korea. These increases were partially offset by a decrease in sales of $21,129 to the Company’s distributors in the U.K. and Switzerland, as well as by two direct customers.

**(b) Six-month sales**: For the first half of 2025 sales of our cosmetic ingredients decreased by $1,700,310 (52%) when compared with the corresponding period in 2024. This decrease was due primarily to a net decrease in sales to ASI of $1,857,857 (60%) when compared with the first half of 2024. The decrease in sales during the first half of 2025 was due primarily to the softer demand in Asia. This decrease was partially offset with a net increase in sales of $157,277 to the Company’s four other distributors and two direct customers. Sales to the Company’s distributors in the United Kingdom, Korea, France, Italy and two direct customers increased by $158,509 while sales to the Company’s distributor in Switzerland decreased by $1,232.

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

### Pharmaceuticals:

Because there are fees, rebates and allowances associated with sales of our 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).

Gross sales of our pharmaceutical products for the three-month period ended June 30, 2025 increased by $14,647 (less than 1%) compared with the corresponding period in 2024. The increase in gross sales was primarily due to an increase of $6,499 (1%) in gross sales of Renacidin combined with an increase of $8,148 (5%) in gross sales of the Company’s other pharmaceutical product, Clorpactin WCS-90.

For the six-month period ended June 30, 2025, gross pharmaceutical sales increased by $295,957 (11%) compared with the corresponding period in 2024. This increase was primarily due to one of our larger distributors securing a new customer which increased their order quantity for our pharmaceutical product Renacidin in the second quarter of 2025. During this period, gross sales of Renacidin increased by $347,106 (13%). This increase was partially offset by a decrease in gross sales of Clorpactin WCS-90 of $51,149 (17%), which was attributable to normal fluctuations in ordering patterns.

Net sales of our pharmaceutical products for the three- and six-month periods ended June 30, 2025 saw a similar pattern, with net sales increasing by $38,015 (3%) and $256,150 (11%), respectively.

The difference between the change in net sales compared with the change in gross sales for these products is due to a combination of the change in gross sales of those products combined with changes in pharmaceutical sales allowances related to these products. Typically, these allowances have a direct relationship with the sales of the Company’s pharmaceutical products.

### Medical lubricants:

For the three-month period ended June 30, 2025, sales of our medical lubricants decreased by $67,170 (12%) compared with the same period in 2024. The decrease in sales for the three-month period was primarily due to a decrease in orders from one of the Company’s larger customers in India. This customer stated that the decrease in orders was due to excess inventory. For the six-month period ended June 30, 2025, sales of our medical lubricants increased by $118,363 (12%) compared with the same period in 2024. The increase in sales for the six-month period was primarily due to an increase in orders from one of the Company’s larger customers in China.

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

### Cost of Sales

Cost of sales as a percentage of net sales increased slightly to 47% in the second quarter of 2025 from 46% in the second quarter of 2024. For the first six months of 2025, cost of sales as a percentage of sales decreased slightly to 46% compared with 47% for the first six months of 2024.

### Operating Expenses

Operating expenses, consisting of selling and general and administrative expenses, increased by $91,273 (15%) and $155,143 (13%), respectively, for the three- and six-month periods ended June 30, 2025 compared with the equivalent periods in 2024. The increase in both periods was mainly due to increases in sales and marketing expenses and payroll and payroll-related expenses.

### Research and Development Expenses

Research and development expenses decreased by $3,792 (3%) for the three-month period ended June 30, 2025, and increased by $7,620 (4%) for the six-month period ended June 30, 2025, compared with the same periods in 2024. The decrease in the three-month period was primarily due to a decrease in accrued bonuses, partially offset by an increase in payroll and payroll-related expenses. The increase for the six-month period was primarily due to an increase in payroll and payroll -related expenses.

### Investment Income

Investment income decreased by $29,434 (29%) and $42,820 (22%), respectively, for the three-and six-month periods of 2025 compared with the same periods in 2024. The decreases in both periods were primarily due to a combination of a decrease in interest rates in 2025 compared to 2024 and a decrease in the amount of funds invested.

### Net gain (loss) on Marketable Securities

The net gain (loss) on marketable securities increased from a loss of $9,501 for the quarter ended June 30, 2024, to a gain of $24,576 for the quarter ended June 30, 2025. The net gain on marketable securities increased from $31,995 for the period ending June 30, 2024 to $36,926 for the period ending June 30, 2025. The Company’s management 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 21% for the first half and second quarter of both 2025 and 2024. The Company’s tax rate is expected to remain at 21% for the current fiscal year.

### LIQUIDITY AND CAPITAL RESOURCES

Working capital decreased from $10,751,082 at December 31, 2024 to $10,613,457 at June 30, 2025, a decrease of $137,625. The current ratio increased from 6.6 to 1 at December 31, 2024 to 6.7 to 1 at June 30, 2025. The decrease in working capital was primarily due to a decrease in cash and cash equivalents and marketable securities. The increase in the current ratio was primarily due to a decrease in accrued expenses.

The Company believes that its working capital is, and will continue to be, sufficient to support its operating requirements for at least the next twelve months. The Company intends to utilize its available cash and assets primarily for its continued organic growth and potential future strategic transactions, as well as to mitigate the potential impact of inflation on the Company's business.

The Company has completed the upgrade of its building sprinkler system and has incurred costs of $184,298 to date and expects to make final payments in the amount of $10,814 during the third quarter of 2025.

The Company generated cash from operations of $625,323 and $1,968,250 for the first half of 2025 and 2024, respectively. The decrease from 2024 to 2025 was primarily due to a decrease in net income.

Net cash provided by investing activities was $885,686 for the first half of 2025. Net cash used in investing activities was $657,533 in the first half of 2024. The increase in cash was due to excess proceeds from the sale of marketable securities compared to the purchases of marketable securities for the six-month period ended June 30, 2025 compared to the same period in 2024.

Net cash used in financing activities increased from $1,148,468 for the first half of 2024 to $1,618,183 for the same period in 2025. The increase was due to two factors: 1) an increase in dividends declared from $0.25 per share in the first half of 2024 to $0.35 per share in the first half of 2025; and 2) the payment of accrued dividends to shareholders whose shares of Guardian Chemical were converted to United-Guardian shares and shares that were escheated during the period.

The Company expects to continue to use its cash to make dividend payments, purchase marketable securities, and take advantage of growth opportunities that are in the best interest of the Company and its shareholders.

### OFF BALANCE-SHEET ARRANGEMENTS

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

### CONTRACTUAL OBLIGATIONS AND COMMITMENTS

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

## Controls and procedures

As filed, 2,034 characters.

(a) DISCLOSURE CONTROLS AND PROCEDURES

The Company’s management, including its Principal Executive Officer and Chief 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, 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 Chief 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 Chief 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 Chief 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, 3,712 characters.

#### Impact of Global Supply Chain Instability, Inflation and Tariffs

The Company is actively monitoring trade policy and tariff announcements including executive orders issued by the executive branch of the United States (“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. On July 31, 2025, an executive order was signed imposing additional tariffs on a wide range of trading partners. While recent reports indicate that these tariffs are set to take effect on August 7, 2025 with the exception of Canada which will take place on August 1, 2025, some countries still have additional time to reach an agreement before their extension expires. It is unclear at this time if retaliatory tariffs will be imposed and what impact they will have on our business. We will continue to monitor the situation closely.

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 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. The impact of the softened demand in China due to these tariffs is reflected in the sales of our cosmetic products during the first half of 2025.

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. There is also a possibility that customers will consider moving their manufacturing from China as a strategic decision to limit the impact from tariffs. We have strong global relationships with our distributors and will continue to work together to understand how tariffs are impacting their business and the business of our joint customers.

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, we do not purchase large quantities of raw materials from this supplier, 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 Aug 8, 2025.
Source: SEC EDGAR, the filing index for accession 0001171843-25-005207. Last ingested by Listed: Oct 24, 2026, 14:54 ET. No prices; not investment advice.