Six
Months Report
September 7, 2000
Dear Stockholder:
I am pleased
to report that earnings
for the first six months of the year have once again attained
a new record for the company, increasing 45% from $841,620
($.17 per share) in 1999 to $1,218,374 ($.25 per share) in
2000. Earnings
for the first six months of the year were only $.03 short of
our earnings for all of 1999!
Revenue for the six-month period increased 18% from $4,966,017 to
$5,853,810.
Our growth over the first half of the year came
primarily from the continued expansion of sales of our core
products, such as our Lubrajel® line of water-based moisturizers and lubricants.
Much of this growth has come from sales into new
markets, particularly Mainland China, by International
Specialty Products (“ISP”), our marketing partner that
handles sales into Asia. We have believed for several years
that this would be a growth area for the Company, and we are
now starting to see the results of the marketing efforts by
ISP.
I am happy to announce
that we have signed a new marketing arrangement with ISP that
should result in continued increases in their sales of our
products over the next few years.
We are very pleased with the progress ISP has made in
generating sales in new territories for us, and we are
confident that our sales will continue to grow as we work
together with them and our other distributors to expand the
uses of our products and work jointly to develop new products
and refine existing products even further.
We have now formally
introduced Confetti® II, the successor to our original
Confetti line, which incorporates various oil soluble
ingredients into colorful flakes that can be suspended in
water-based formulations to create products that are both
colorful and functional.
The original Confetti had
limitations that prevented it from being used in
certain formulations. Confetti
II overcomes these limitations, allowing the product to be
used in a much wider variety of formulations.
Although we are continuing to supply the original
Confetti to those customers that want it, we expect within the
next year to convert most if not all of our customers over to
the new product.
Over the past year I have
made many references to a contract we have been working on
with a major personal care products company headquartered in
the United Kingdom. That
company is incorporating one of our Lubrajel products into an
existing product line as a substitute for another material.
The product will be sold worldwide and has excellent sales
potential for us. In
July that company officially launched the new product line on
a limited basis, and is now awaiting feedback from consumers.
Their hope (and ours) is that consumers will see either
no difference or a positive difference between the new product
and the old. Assuming
that is the case, the company then expects to begin a major
launch of the product worldwide.
While we do not expect this project to generate
significant revenue until next year, we are very pleased that
they have gone forward with the project, and are hopeful that
they will achieve the results they are looking for.
Sonarite®, our
proprietary formulation to reduce snoring and sleep apnea, is
about to undergo additional preliminary clinical trials at
Queens University in Canada, using our most recent
formulation. We
are hopeful that if these trials are successful, we may be
able to bring the product to market for the reduction of
snoring, and that we will be able to interest a partner in
working with us on the sleep apnea use, which will require
regulatory approval
We
have also been trying to find a suitable partner to work with
us on a new use for Clorpactin®, our proprietary
chlorine-based antimicrobial product, in treating periodontal
disease. With the
assistance of our consultant, Mertech, we have had discussions
with several interested companies, but most have requested
some initial clinical data before they can make any
commitment. We
are in the process of investigating the costs involved in
doing Phase I clinical trials on our own.
If we do so, and the results are positive, we should
have no trouble finding a suitable partner to work with us on
the project.
I hope that by now most of
you with Internet access have had an opportunity to visit our
redesigned web site. If
you do so you will see an ad for our Razoride™ shaving gel,
which was formally launched by us on August 14th,
along with our DermaSureÔ
Protective Skin Barrier.
You can now go directly to this new web site at
www.razoride.com. In the first 10 days that our Razoride web site was on line
we received over 3000 requests for samples!
We are very excited about the prospects for this and
other products that we intend to add to the site over time.
We have also begun bulk
sales of Razoride to two companies selling the product for
special non-consumer uses.
Both have the potential for significant sales, but at
their request I cannot yet disclose the uses for which they
are marketing the products.
You may have
noticed that we did not release a first quarter
stockholders’ letter this year.
We decided not to do so for several reasons.
First, if we were to release a first quarter letter
when it should be released, which should be by the end of May,
it will only have been a little over one month since the
release of the Annual Report.
For this reason, in the past we have held off releasing
that report until June, but by then the financial information
is already old, and it also throws off the timing of future
letters. Because
of this we have decided to eliminate the first quarter
stockholders’ letter and instead release the 6 months report
much earlier. The
financial results for the first quarter will still be released
by way of a press release no later than May 15th, and will be
available immediately to stockholders on our Internet site (www.u-g.com). It will also be e-mailed to any stockholders who request that
we do so, or
mailed to any stockholders who do not have access to the
Internet. Based
on this timing, there will only be approximately four months
between the Annual Report and the Six Month Report. If any event occurs that we feel would be of significant
interest to our stockholders, we could still issue a
supplementary report as needed.
Earlier this
year we experimented with releasing our financial results and
stockholders’ letters only on the Internet, while offering
stockholders who do not have Internet access the option to
continue to receive a copy of the releases by mail.
The reaction was very favorable, with only a handful of
stockholders asking for hard copies.
By
distributing our stockholders’ letters solely via the
Internet the Company not only will be able to get the
information out faster, but will save the considerable costs
of printing and mailing the letters.
Since the majority of American households now have
Internet access, we believe that the time is right to
eliminate the costs involved with mailing our stockholders’
letters when many people would actually prefer to receive them
electronically.
For this
reason, this six-month report will be the last one we
will be mailing out. Anyone
who would like to continue to receive a copy by mail should
contact us at 1-800-645-5566, and we would be happy to mail
one out. Those
stockholders with e-mail who would like the press releases and
stockholders letters e-mailed to them immediately upon their
release should e-mail their request to pgc@u-g.com.
If anyone has
any comments on this decision, either positive or negative, we
hope that you will contact us and give us your thoughts.
Sincerely,
UNITED-GUARDIAN,
INC.
DR. ALFRED R. GLOBUS, Chairman and CEO
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