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Six
Months Report Dear Stockholder: Since we did not put out a first
quarter stockholder letter this year, this letter will address the
financial results for both the first and second quarters. Earnings for the first quarter ended March 31st
increased 2% over the same quarter last year, setting a new high for
the company. Net earnings
for the quarter were $636,116 ($.13 per share), compared to $623,077
($.13 per share) in the same quarter of 2000. Revenue declined slightly from $2,913,349 in 2000 to $2,829,845
in 2001, due primarily to a decrease in sales of our Eastern Chemical
subsidiary, which we are continuing to downsize with the intention of
exploring the possibility of putting this division up for sale in the
future. For
the second quarter ended June 30th sales showed a modest
decrease from $2,940,461 last year to $2,593,955 this year. Net
earnings for the three-month period were $443,262 ($0.09 per share)
compared to $595,297 ($0.12 per share) in the same period last year.
For the first six months of the year sales were $5,423,800 compared to $5,853,810 for the same period in fiscal 2000. Net earnings for the first six months of 2001 were $1,079,378 or $0.22 per share, compared to $1,218,374 or $0.25 per share for the same period last year. While we all would have preferred to have been able to maintain the continuous increase in sales and earnings that we have experienced over the past few years, the first six months of the year have still been very profitable, and we are confident that while there may be some minor quarterly adjustments along the way, our potential for future growth is very strong. As
a result of our continued profitability, our balance sheet continues
to grow stronger all the time, with our current ratio increasing from
7.8 to 1 at the end of last year to 13.1 to 1 as of As
usual we are involved with many different projects that hold exciting
potential for the future. We
are continuing to explore new opportunities to expand our product
lines to enable our marketing partners to expand their offerings of
our products. Our
researchers are presently working on a next generation Lubrajel®
product that we hope will further expand the global market that this
product currently enjoys. Lubrajel
is our proprietary line of water-based moisturizing and lubricating
gels that are used extensively throughout the world by most of the
major cosmetic companies as well as many companies that are marketing
medical products. We are
working to enhance the properties of this product to allow it to be
used in product formulations with which it is currently not
compatible. We are only in
the early stages of this project, but we are very excited about the
potential for this product to significantly expand the uses for our
Lubrajel product line. Another
new project is a preliminary clinical trial that is about to take
place to test the effectiveness of Clorpactin®, our
proprietary chlorine-based antimicrobial product, in the prevention
and/or treatment of periodontal disease.
This project was recently approved by the Institutional Review
Board of the Boston University School of Dental Medicine, and we are
now going forward with it. We
will initially be testing its effectiveness in the prevention of
gingivitis. If that is
successful we hope to expand the trial to other more serious
periodontal diseases. We
expect this initial clinical trial to be completed by the end of
September. You may recall that a few years ago
we developed a product known as Phosphocholate, which was a mouth
moisturizer used primarily by cancer patients.
The company that we developed that product for discontinued its
use for reasons unrelated to the effectiveness of the product.
We believe that the product still has tremendous potential and
have been actively working to find a new company to bring it back onto
the market. We have had
discussions with two interested companies; one of them has expressed
serious interest in pursuing it further, and the other is still in the
preliminary evaluation stage. We
hope to be able to enter into new marketing agreements with one or
both of these companies to bring this product back onto the market. We are continuing to work on our project with a major personal care
products company headquartered in the While we have decided not to go
forward with our plans to launch our Razoride shaving gel into retail
markets, we are continuing to work with some of our marketing partners
to explore the possibility of marketing this product to hotels and/or
airlines. We have one
company evaluating the product for this purpose now, and hope to
interest others as well. We
are also going to continue our efforts to place the product with mail
order catalogs, and are continuing to sell this product in bulk to two
companies that are selling the product for special non-consumer uses. Over
the past few months we have received some inquires from shareholders
about sales of United-Guardian stock by insiders, including myself. In
my case the sales were all non-public sales for very specific
purposes. The first was a
sale of some of my stock back to the company in connection with the
repayment of advances made on my behalf by the company pursuant to a
life insurance policy that has since been terminated.
The other sales were to cover the exercise of some outstanding
stock options that I had offered to some individuals in connection
with some work they were doing for the company. The
impact of all of these sales was very minor, reducing my stock
position in the company from approximately 32% to 30%.
I have complete confidence in the company, and if it were not
for these prior obligations I would not have sold any of my stock. The
other insider sales were all for small amounts of stock that were sold
pursuant to the exercise of stock options issued in connection with
the company's employee incentive stock option plan.
Those options had been held for many years and some of them
were going to expire if not exercised. The
aggregate of the sales by insiders constituted less than 0.2% of the
total shares outstanding. I
believe that most stockholders will understand that insiders exercise
stock options and sell stock for many different personal reasons that
have nothing to do with the company. The
management of United-Guardian is very optimistic about the future of
the company. At a time
when many other companies are reporting losses and layoffs we continue
to be profitable and grow financially stronger every year.
I personally continue to be very excited about all of the
projects that we are involved with, and am confident that the company
will continue to grow in the years to come.
RESULTS
FOR THE FIRST QUARTER ENDED
3
Months Ended Revenue: $
2,829,845 $ 2,913,349 Costs and expenses: 1,879,713 1,958,950
Earnings from operations: 950,132 954,399 Other
income: 65,984 39,378
Earnings before income taxes: 1,016,116 993,777 Provision
for income taxes: 380,000 370,700
Net Earnings: $ 636,116 $ 623,077 Earnings
per share (Basic and
Diluted): $
.13 $
.13
6 Months
Ended June 30, 3
Months Ended June 30, Revenue: $
5,423,800 $
5,853,810 $
2,593,955 $
2,940,461 Costs and expenses: 3,833,390 4,000,890 1,953,677 2,041,940
Earnings from operations: 1,590,410 1,852,920 640,278 898,521 Other income (expense): 131,708 90,954 65,724 51,576
Earnings before income taxes: 1,722,118 1,943,874 706,002 950,097 Provision for income taxes: 642,740 725,500 262,740 354,800
Net earnings: $
1,079,378 $
1,218,374 $
443,262 $
595,297 Earnings per share (Basic and $
0.22 $
0.25 $
0.09 $
0.12 ASSETS:
(UNAUDITED)
(DERIVED
FROM AUDITED |
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